Disruptive Technologies - A funding opportunity or a waste of money?

I was recently asked to look at what are the next investment opportunities in the Internet space and consider whether there were are obvious disruptive technological aspects which could provide superior returns.
Well in my experience investment in technology and more specifically that related to the Internet is a gamble at the best of times and almost certainly depends on luck as much as the naturew of the invention.
A disruptive technology is a new technological innovation, product, or service that eventually overturns the existing dominant technology in the market, despite the fact that the disruptive technology is both radically different from the leading technology and that it often initially performs worse than the leading technology according to existing measures of performance. A disruptive technology comes to dominate an existing market by either filling a role in a new market that the older technology could not fill such as more expensive, lower capacity but smaller-sized hard disks did for newly developed notebook computers in the 1980s or by successively moving up-market through performance improvements until finally displacing the market incumbents as in the case of digital photography which has begun to replace film photography.

Some examples of disruptive technologies include:-

• Music downloads and file sharing vs. compact discs
• eBooks vs. paper books
• e-commerce vs. physical shops
• Open-source software vs. proprietary software (for example Linux versus Microsoft Windows, although Linux has already largely displaced proprietary Unix)
• Internet Video on Demand and IPTV vs. Advertising supported broadcast and cable television
• VoIP over vs. traditional telephone and mobile phone service.
• portable mp3-players vs. the portable cassette players
• DVD vs VHS tape (VHS has already undergone a great decline, particularly in the market for pre-recorded tapes, although the price of DVD recorders remains high enough for VHS home-recording to hang on for the present)

The Internet is considered by many to be the ultimate disruptive technology, changing the ways businesses operate, creating new channels, destroying bastions of value, and establishing entirely new revenue sources. The Internet may be regarded as a super group of a whole range of disrupting process including impact on Banking, Telecoms, Media, Manufacturing and Design. Frequently areas combine to yield the most unexpected results and more importantly extraordinary profitability.The key to the identification of disruptive opportunities is in the selection and potential more critically the timing.

Recently, I have identified three opportunities which represent investment opportunities in areas which will critically impact the development of the Internet in key sectors.

Web Repurposing for the Mobile Market

This business provides a means for client browsers on mobiles to access web sites that directly are too complex for them. The company uses proxy technology to takes away site complexity before delivering simple pages rendered 'fit for purpose'. This enables standard web sites to be viewed on any mobile device and more importantly allows all the ecommerce interactivity to also be completed. The technology can be used on a wide range of mobile devices as well as VOIP display phones. The company has already run successful trials with a number of major mobile operators and provides a service to a specialist device operator.

Development of frictionless financial transaction services.

This company is the only one that allows top-up services accessed directly from bank accounts for mobile pre-paid, Internet web-cash, pre-paid transport, WIFI and e-money stored value providers; roaming recharge services; transactional marketing services including pre-paid loyalty and bonus management, and business process outsourcing for the customer not present, prepaid, low-value and mobile initiated payment market. This form of money transfer is going to change the way we move money around the world and will disrupt the banking system by bypassing the traditional transfer costs between currencies. The company is an experienced business process outsourcer in the rapidly growing 'direct' mobile prepaid top-up channel, e-money stored value, transport and WIFI markets and it is already working internationally with mobile operators and e-money providers and is delivering on its promises in groundbreaking market sectors.

Monetisation of Internet Errors

This company has developed patented technology, which can monetise the errors resulting user mis-types, broken web links, crashed sites etc. The technology identifies the error and then analysis the web error data to establish where the user was attempting to access. This technology and its exploitation through PPC and CPA partners provides ISPs and users alike a method for both improving the surfing experience and also enabling ISPs to take back control of their users traffic and generating significant additional revenues.

All of these examples are disruptive technologies in the various field of activity in the mobile, banking and Internet fields. In all cases, the businesses have successful grown beyond the “new born” stage to the point where major businesses are beginning to trial their solutions. They are at the “realisation” or second stage of development and will need funding to realise a significant future.

Could they succeed without help? Almost certainly yes, but they will not have the opportunity to achieve their real potential. Are they a waste of money? Absolutely not! Having been involved in a number of ventures, some of which have had stellar growth funded by VC money and which in some cases made spectacular money and in others disappeared as quickly as they had appeared, the investments have grown the "body of knowledge" which has frequently led to further developments. Investment in the "bleeding edge" is seldom comfortable, but it is always rewarding for those lucky enough to have been involved.