The past 16 months have been hectic for Stan Laurent, QXL.com's senior vice president of sales and marketing. During that short period of time the online auction company has expanded into 13 European countries.

"It's a crazy speed because these markets are taking shape very fast. Scale within a country is important because more buyers and sellers come onto the site," he explains. "Critical mass within one country gives you a powerful barrier to block out the competition. If anyone else gets critical mass before you, it is going to be costly and lengthy to catch up."

The activities and experiences of QXL are typical of plenty of other internet companies who are now scrambling frantically at blistering speeds to grab virtual land in Europe. With the US market already saturated, many of the emerging online markets of Europe are still waiting to be taken, and every wannabe e-tycoon wants his or her share.

You only have to consider the scale of the market that is shaping up to understand what is driving this virtual stampede. Jupiter Communications predicts that the number of online buyers in Europe will more than quadruple, reaching 85m by 2005, up from 20m in 2000.

It is a market which is currently dominated by the Northern European countries. Analysts predict that the UK and Germany will account for 55% of Western European consumer online spending. But they expect to see southern Europe catching up, led by growth in countries such as France, Spain and Italy.

US entrants such as Amazon and eBay, traditional European retailers, and start-ups like Gameplay, Let'sBuyIt and LastMinute are all locked into this online battle, but as ever the key catalysts of this activity, lurking behind the scenes, are the venture capitalists.

"It is basically unattractive to back an internet business which only has a strategy for operating in one country," explains Paul Vickery, director of e-business for 3i, a leading VC firm. "Their markets are changing so rapidly that they have to expand as quickly as possible because they are going to be under severe attack from US operators."

Vickery believes that countries such as France and Germany offer better defensive qualities for start-ups because US companies are not seen as masters of adapting to the linguistic and cultural demands of local European markets. The other main reason why VCs are so keen to push expansion into Europe is because it increases the chances of an IPO (Initial Public Offering) which gives VCs "exit opportunities" meaning they can cash in their shares and make their fat profits.

3i refuses to reveal actual figures but readily admits that a substantial share of its internet investment portfolio is now concentrated on Europe. In the months ahead, it is likely that the all-powerful VCs will force start-ups in their portfolios to merge with each other if they are not moving quickly enough.

"Speed is of the essence. The first signs of failure in an e-business are when the pace of the execution of the plan starts to slow down," Vickery explains. "Europe is the most dynamic sector of investing. It is the area where we will see the most dramatic successes and the most dramatic failures."

Europe is not an easy market to penetrate successfully. PCs remain the dominant interactive platform in Europe with mobiles and digital TV spreading fast. But unlike the US which is largely a single homogenous market, Europe is a collection of numerous markets based in individual countries with varied languages and cultures. Although at the end of last year, only six European markets - the UK, Germany, France, Italy, Sweden and Spain - comprised 78% of the total Western European online market.

For any new web sites to reach a significant number of European households, they have to be translated into several languages, and products and content often have to be altered to accommodate different cultures. On top of that, e-entrepreneurs have to contend with traditional business issues such as local legislation, VAT and exchange rates. Directors also have to decide whether or not to acquire businesses to gain a customer base and ready-made fulfilment services or to grow organically.

Monster.com, the online global recruitment service, is steadily building up a sizeable European presence, and plans to go into Spain this month and Italy next month. Andrew Wilkinson, Monster.com's European managing director, says the amount of money spent on entering a new European market depends on the levels of internet penetration and the rate of take up. "Our strategy has been to take the global functionality and localise it completely. We go in with a local address. The content is localised. We hire a local manager and we then build the local site around the local culture and customs. We have a completely local-focused team to ensure job seekers feel it is just right for them."

There is a risk for any internet company going into a new European market that its brand name could mean something quite different. Wilkinson feels the name makes the company stand out from the other recruitment sites called jobs- something.

The online market that all internet companies want to dominate is Germany. Jupiter Communications forecasts that Germany will have the most online buyers in Western Europe reaching a total of about 21.2m online by 2005.

A number of dot.coms are pitching aggressively for the loyalty of online German punters but they face stiff competition from big traditional German catalogue retailers. Players such as Otto Versand also have their own warehouses and packing centres. Nevertheless, analysts forecast that the huge amounts of VC cash being pumped into start -ups in Germany is likely to change the present set up.

Germany may be the largest market but the Scandinavian countries have the reputation for being the most web-sophisticated. About 40 % of households are online. Sweden is expected to have 50% of its population online by the end of 2000.

"The people we should be looking at in admiration are the Scandinavians," says Nick Rosen, co-author of Business.eu, a recent report on European web activities. "They have more sophisticated web sites, higher budgets and higher levels of web usage"

But as the battle for Europe's online markets intensifies, industry insiders are nervously wondering when there is going to be a shake out. Just recently a group buying site, LetsBuyIt.com cut 20% of its workforce across Europe even though gross profit margins for the three months ended June 30 rose to 9.8%, up from 2.9% the previous quarter.

"Shake out implies that a lot of European internet companies are going to be thrown to the floor and stamped to a pulp," says John Browning, co-founder of First Tuesday, the international e-entrepreneurs' community. "We have seen this sudden eruption of start-ups in Europe and there are going to be mergers and takeovers. I think a lot of the internet companies will hook up with bricks and mortar companies."

Martin Coles, LetsBuyIt.com's chief executive, denies that the decision to shed staff signals a flaw in the company's European strategy. Instead he puts the job losses down to a need to restructure and centralise the company's services now it has developed a pan -European presence. The company based in Sweden, has expanded rapidly but competition is fierce.

"The UK, Germany and the Nordics have enormous internet penetration, but on the other hand, they have some of the best developed retailers. I try not to make a distinction between us and bricks and mortar retailers. We are all competing for a share of wallet," Coles says.

But he adds that he is open to alliances with those competitors.

It is to looking increasingly likely that the traditional bricks and mortar companies will fight back.

They have brand recognition, existing customer databases, local know-how, fulfilment services and usually stronger supplier relationships.

They will probably have the decisive say in the shape and nature of Europe's new online markets.