Australian investors have wiped off $4 billion from technology stocks since last April's crash, according to a report from accounting group KPMG.
The report shows the impact of the technology meltdown, warning negative sentiment could threaten Australia's ability to compete in the global race for new technology.
The analysis compared the dotcom sector at April 14, 2000, two days before the crash, and March 28, 2001.
During this period market capitalisation in Australia decreased by 66 per cent to $2.2 billion, down from $6.4 billion.
The decline oustripped a 45 per cent fall in the Nasdaq index over the same period with 31 companies falling in value by more than 70 per cent while 11 per cent plunged more than 90 per cent.
KPMG corporate finance's national head of mergers and acquisitions, Antony Cohen said terrible capital market conditions are threatening to kill off good, unlisted businesses in the technology area through lack of funds.
"Australia has a critical funding problem for its technology developers which is undermining our ability to keep pace with new e-commerce and IT technologies," he said.
Cohen warned there will be a shakeup in the dotcom sector in coming months, with many involved in forced takeovers.