Nine Web 2.0 Startups Beating The Odds in Down Economy

By C.G. Lynch, CIO.com |  Internet, startup

As the economy struggles, the ability to receive funding for an idea and turn it into a successful start-up company will become increasingly difficult. But at the Web 2.0 Summit in San Francisco today, nine companies explained how they got their companies off the ground with initial funds of US$50,000 or less.

At the event, Guy Kawasaki, managing director of Garage Technology Ventures (an early stage venture capital firm), noted that times had changed for Web 2.0 start-ups, making the lessons learned by companies that took modest investments all the more important.

"The genesis for this is are the economic times we're in," Kawasaki said. "The old days of starting a company by going to investors and giving a PowerPoint presentation - and then getting $2 million - are over."

With than in mind, here are nine companies that have developed nifty Web 2.0 sites (with only a little cash up front).

1. Wufoo
Where they're based: Tampa Bay, Florida

What they do: Allow users to make online forms with no HTML experience. They can create forms that help people register for a website, workshop or mailing list. As people respond and fill out the forms, users can measure their responses by running reports and viewing charts.

Quote from co-founder Kevin Hale: "We don't just strive to collect information, but analyze it as well. [With no coding experience necessary], it's for secretaries who want to avoid the IT department."

Where they got funding: Hale says they were initially funded by Y Combinator (a venture capital firm that gives small funding rounds, usually of $20,000 or less, to companies in their infancy).

Business Model: Free for individuals; charge fees for groups and businesses.

2. Yoics
Where they're based: Palo Alto, CA

What they do: A Web-based portal that allows you to access your computers or network devices from anywhere, without the cumbersome process of setting up remote desktop capabilities.

Quote from founder, Ryo Koyama: "Our view is that everyone knows how to use a Web browser. So there is no reason all your data shouldn't be accessible from the Web. Setting up a remote desktop tends to be a more complicated thing."

Where they got funding: According Koyama, they launched the product with their own resources before receiving funding.

Business Model: Licensing to networking technology companies.

3. Dropbox
Where They're Based: Bay Area

What they do: Dropbox allows you to synch and share your files online. One of the upsides to the service is that any change or update you make to a file, it is updated across all your devices that access it. It also has good version control, allowing you to "undelete" files.

Quote from founder Drew Houston: (Referencing Dropbox's sophisticated version control): "It's almost like a time machine that works across all platforms."

Where they got funding: $15,000 from Y Combinator. They later received funding from Sequoia Capital.

Business model: 2 GB free to users; they charge for additional storage.

4. Disqus
Where They're Based: San Francisco

What they do: Pronounced "discuss," Disqus allows users to track the comment threads they participate in, on websites across the Web, all in one central area.

Quote from cofounder Jason Yan: "With Disqus, immediately, I see all the comments I've left across websites and I can see when other people replied to [my comment] without having to check out each individual website all the time."

Where they got funding: $15,000 from Y Combinator.

Business model : Get money from publishers/media companies looking to use the service for their entire sites.

5. MightyQuiz
Where they're based: Bay Area

What they do: MightyQuiz is a user generated trivia game. People can share knowledge with others and have them answer trivia questions in response.

Quote from COO Kelly Bennett: "Our motto is everyone is a trivia junkie for topics they love."

Where they got funding: Initially $10,000 from Y Combinator.

Business Model: Unclear based on their presentation, but given its social nature most likely ad-based.

6. SlideShare
Where they're based: San Francisco and New Delhi

What they do: Enable you to easily share PowerPoint presentations online.

Quote from cofounder Rashmi Sinha: "How many times have you received [presentation] files that clogged up your inbox? We created a social space to share them instead."

How they got funding: According to Sinha, they got modest investments up front. The later received money from angel investors like Mark Cuban and venture capital from Venrock.

Business model: Their site allows people to take out ads.

7. Posterous
Where they're based: Bay Area

What they do: The service allows users to publish blog posts by simply typing them in to their favorite e-mail service, such as Gmail. It also takes links that were pasted into the email and makes them come alive in the blog post (as an example, a video link posted into an email would appear in its full video form in the blog post).

Quote from cofounder Garry Tan: We can take a link that is worthless [and make it] more intelligent. The user doesn't need to know how to embed code."

Where they got funding: $15,000 from Y Combinator

Business Model: Free for individuals. Premium subscription model in the works.

8. RescueTime
Where they're based: Seattle area

What they do: They measure how much time users spend on the Web, on either a website or application. While it sounds a bit Big Brother like, it's really for users to determine how productive they're being on a daily basis (how much time did you spend in email yesterday?). It does offer organizations a management view to see organizational behavior, but individual users' identities are protected.

Quote from cofounder Tony Wright: "It's not a micro-manager tool. We offer a categorized view of how you [and your organization] is spending time. That allows you to be more efficient."

Where they got funding: Wright didn't specify amount, but it was from Y Combinator, so likely under $20,000.

Business model: Free for individuals; fee-based for organizations.

9. Poll Everywhere
Where they're based: Chicago and Boston

What they do: They make presentations interactive by allowing users sitting in an audience to text questions to the speaker and see them populate on a webpage.

Quote from co-founder Jeff Vyduna: "Our goal is to make presentations a two-way medium."

Where they got funding: $20,000 from Y Combinator.

Business Model: Free for up to 30 people, but priced per month as a service after that based on audience size.

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