Tech startups / VC - commercial viability

Article supplied by ManufacturingHub.co.za.

Every now and then, one of the technology bloggers or publications will run

with something along the lines of:

"South Africa's most promising technology start-ups"
"South Africa's best Web 2.0 offerings"
"South Africa's best web start-ups"

and then they will go on to mention the usual suspects such as Afrigator,

Amatomu, Muti, Zoopy, Blueworld, iBlog, Mxit etc etc.

But what I worry about is what makes these tech start-ups the "most promising" or the "best" from a commercial perspective.

NOTE I SAID COMMERCIAL PERSPECTIVE.

Many of these are really great web tools and I use all of them regularly, but for something to be "most promising" or "the best", you need to have a commercial aspect to it as well don't you agree?

I can come up with many brilliant concepts but if I can't make a return off it, then is it all that promising?

I've spoken to a couple of different people involved in these and other start-ups and I've been to a couple of venture capital / MBA / 'ideas' forums almost all of them agree that while the concepts are useful - the owners have no idea how to monetise what they've got.

Amazon.com
I have been wracking my brains trying to remember where I read an article about online reseller Amazon.com.

The author's concluded that Amazon was USEFUL to him as a consumer because he got goods nice and cheap but as an INVESTMENT, he would never touch the company, because it would battle to be profitable.

My feeling is that tech in South Africa has grown up. Legislation is easing, there is plenty of venture capital money from both media, communications and private investors to be thrown around - in general the industry is growing up.

But part of this growing up process is going to be a demand to differentiate between cool concepts and viable business models. This I think is where venture capitalists have a big role to play making 'hands on' type investments.

There is a lot of talk about "social networks" having the potential to make money because they attract niche markets to their sites and try to develop return traffic which must 'surely' have some way to be monetised.

A lot of these social networks / social tools are bleeding money and using the excuse that once they reach a "critical mass" they will be able to start making money - but the question has to be asked - will they EVER make money.
Will somebody start to pay for something if they have been used to getting it for free?

USEFULNESS vs. COMMERCIAL VALUE

We have some really good tech concepts and businesses in this country - but if we can't differentiate between something that is useful and something that is commercially viable how can the country build solid investment in its venture capital market?

OR... (And I don't have the answer so I am throwing this question out there)

Do you take the view that something like Muti or Afrigator for instance is an ENABLER and by owning the ENABLER you give your chance to break into the commercial market as well?