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The end of the Internet ?
So, is it the end of the internet? Waking up after the Easter holiday I was surprised to hear Radio 4's Today programme announce that Durlacher was to stop investing in internet start-ups ! This throwaway statement was, of course, completely incorrect, but it was interesting nonetheless. Similar, in a way, to an internet site I recently encountered which announces "you have reached the last page of the internet - please switch off your computer and go outside". After all, if Durlacher had stopped investing in internet firms, perhaps we really had reached the last page !
Following recent market fluctuations, I am sure many investment firms get asked about the impact of the markets on their investment strategy. At Durlacher, we are passionate about the opportunities that the internet presents. Specifically, we believe that there are significant growth opportunities in mobile commerce, business-to-business (B2B) e-commerce, broadband, and convergence, and are continuing to invest actively in all of these areas. On the business-to-consumer (B2C) side, the market has matured somewhat and there is no longer the Wild West mentality, where companies were being ascribed extremely high valuations on the basis that they were capturing virgin territory. In the early days of the internet, particularly in the United States, consumer focussed internet companies such as Ebay, Yahoo and Amazon had a several year head start before offline companies woke up. As a consequence they were able to capture customer loyalty early and build brands that are still growing strong. Today, a lot of the ground in the vertical community space has already been captured, and the offline companies have woken up too. We believe there will continue to be great investment opportunity in B2C (particularly for online-offline partnerships), but a greater focus must be placed on ability to generate revenues and move quickly to profitability.
Overall, our investment strategy is absolutely unaffected by short term movements in the stock markets. Durlacher uses its knowledge to identify, and increasingly to create, early stage opportunities, and to work closely with private companies over an extended period of growth. Far from reaching the last page, we've hardly finished the first chapter, and it's just beginning to get interesting . . .