Lack of investor confidence in dotcoms is spreading from the business-to-consumer (B2C) to business-to-business (B2B) sector as UK online food exchange Efdex goes into liquidation this week.

Efdex ran out of money and could not raise the extra $25m required to keep the company going, confirmed Kroll Buchler Phillips, the London insolvency practitioner handling the case.

"They had initially raised $60m to develop the business, but the market fell away for raising capital during this spring," said Kroll Buchler Phillips partner Lee Manning. "They burned the cash they had."

Efdex, founded in 1994 by Tim Carron-Brown, planned to use its website to link food and drink distributors using internet and satellite technology to provide them with real-time quotes, industry-focused television news and market analysis on a secure trading platform. Target users were farmers, restaurants, hotels chains, fish markets and bars.

Farmers, for example, could check Efdex to find out which market was offering the best price for a particular product. The initial project was to be based in the UK, while a second test project was planned to take place in the Oman.

"The irony is that the concept never got the chance to prove itself. It was not up and running, and the market for cash went cold," said Manning.

Efdex began to run into troubles in the autumn of 1999, he said, yet by April this year the company was employing 200 staff at its Reading, Berkshire offices.

In May, Efdex chief executive Ellen Marram was removed by the board of directors. They went to their creditors in early August to ask for a month in which to raise a further $25m, but time and money ran out. This was in spite of having a clear business plan that identified revenue generating streams such as commission from transactions, advertising and the sale of market information, said Manning.

IBM, which was developing the $25m transactional platform, is one creditor that has not been fully paid for their work. What happens to the technology now is unclear, said Manning, although IBM could have a claim on it.

"We are now dismantling the company offices, which is all they had. The staff have gone and there will be claims, but there won't be any money to pay anyone," said Manning.

The current climate for raising cash is now "potty" and investors are acting like "lemmings", he added.

"The markets are fickle, but how can sentiment change overnight? All of a sudden nothing is worth investing in. Once you start you should go through the whole race, not stop halfway through."

Efdex's demise follows other recent high-profile UK dotcom failures including B2C sites boo.com and Clickmango.