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By Sally Watson, 17 May 2000 17:54

NEWS The vast majority of UK dot-coms will run out of money in the next 15 months. This is according to research by consultancy PricewaterhouseCoopers (PwC). PwC looked at 28 dot-coms listed on the London Stock Exchange and Alternative Investment Market and found that 25 of these companies will hit a cash crisis within 15 months. Researchers used the most recent financial statements to calculate the length of time the company could continue to operate before needing to raise additional cash - a figure known as the 'burn rate'*. Ten of the firms looked at have an estimated burn rate of less the 12 months. John Soden, partner at PwC, believes the situation is not unusual for start-up companies, but, in this instance, has been exacerbated by the enormous number of dot-com firms and their increased speed to market. Soden said: "Start-ups are burning cash very quickly in a race to establish themselves in the market as soon as possible. They're spending huge amounts of money on marketing because of their need to build a brand - they have no established trust factor - no reliability with consumers." The research comes at a bad time for start-up ecommerce firms, following last month's fall in share prices for technology firms across the world. According to Soden, the next 18 months will see consolidation in the dot-com market. He said: "We're going to see two different types of consolidation, between dot-coms themselves, and with old economy companies who need to get into the market. Merging with an established company will give dot-coms stability, backing and brand name." *Burn rate is calculated by dividing cash on balance sheet by cash operating expenses minus gross profit, assuming that cash operating expenses and gross profit grow at same rate as Internet commerce (130 per cent per annum).