Seven out of 10 British internet start-up companies will go bankrupt within two years, according to a survey, reports the Press Association.
The report published by the London-based Rubus consultancy cites the lack of e-business experience among entrepreneurs and investors as the most compelling cause of failure.
"The web offers a huge potential to create new businesses and prosperity, so it’s natural there is a boom in this area," says Michael Walton, the company’s founder and chief executive.
"But there’s just too much dumb money being thrown at dumb ideas," he added.
The report, which was focused on 120 home-grown e-commerce companies, found many had under-estimated the need to develop a strong brand identity.
It also says many aspiring entrepreneurs believe a good idea is enough, without analysing whether the business model is really likely to be attractive to customers or even best suited to the medium.