E-Capital Investments, the London-based technology incubator, has been hit by a £1.1m loss from the sale of Virtual European Office (VEO), its business development consultancy, to VEO's management for £1 (€1.6).

The loss comes as E-Capital struggles to realise returns on investments due to the global meltdown in internet and technology stocks. The company said it would try to focus investments after the sale and use its outstanding cash reserves of approximately £14.7m to seek new opportunities other than its traditional investments in technology companies.