With financial markets crashing and consumers keeping their wallets firmly shut, this year seems like the worst time ever to be starting a new venture. But whilst traditional businesses are grappling with the shortage of capital and a dearth of customers, online businesses with low establishment costs are successfully aggregating huge global audiences.

But even web based businesses need some fundamental attributes in place. A good supply chain, stable technology, a clever marketing plan and a sound business strategy. Most of all, you need to be solving a problem that really exists. All of these fundamentals can be achieved with very little capital investment, especially if you have a capable team who are prepared to contribute some time to the project in return for a stake. The days of inflated company valuations and leveraged buy-outs are over, replaced by a flight to quality. Door knocking around VC’s with your powerpoint show and business plan is a poor investment of your valuable time in this market. Look to your customers as the primary source of capital.

By adopting open source technologies and hosted services and by building communities of interest around the business, startups can bootstrap themselves to a point where they can prove that their business model works – and that’s a far more attractive proposition to a future investor. The size of the business is irrelevant to begin with. Small is beautiful in 2009 and the winning measures of success will be net revenue per employee plus the intangible gains from building social capital around your idea. Innovative web businesses will continue to find niches to occupy even as the masonry is cracking and falling off bigger, incumbent players in their death throes.

If you have a great idea for a web based venture in 2009 and would like some feedback on how to get started, drop me a line or post a reply below. Happy New Year.

Three online ventures launched last week proving once again that Wellyweb is a happening place when it comes to web-based creativity. And since our foreign owned traditional media channels give scant coverage to local start-ups, here’s a quick run down of who’s doing what.

Door knocking and standing on street corners is so last century when it comes to fund raising. Givealittle is a community site that matches donors with worthy causes, not to mention saving you from sore feet and being chased by rabid dogs. If you are a social entrepreneur in particular, this site offers a virtual base of operations for building a loyal band of supporters. And if you have a desire to contribute, Givealittle offers a host of projects to choose from and protects your anonymity. Now with both Christmas and an economic squeeze looming, some companies are even using the site to provide their staff with a unique donor opportunity instead of organising gifts this year. Givealittle has solid backing and the potential to scale up globally, so it will be interesting to see how it develops in the future.

Hirewall is a recruitment management tool that helps employers control the candidate selection process. The beauty of Hirewall is that it delivers value irrespective of whether the employer is working with a recruitment firm or recruiting talent directly. So one of the keys to success for Hirewall will no doubt involve developing strong relationships and building trust within the recruitment industry. Hirewall is the brainchild of Tim de Jardine who is in the vanguard of the next wave of “quiet achievers” who like to think outside the proverbial polygon.

Another member of this new wave is Wellington old boy, technology commentator and cloud watcher Ben Kepes who has pulled together a number of interesting deals this year including securing sponsorship for the new Bizchat site. Ben has a passion for supporting and growing the small and medium sized businesses (SMEs) that are the foundation of our economy. He also has a strong understanding of where business fits in a social context. That makes him a great champion for Bizchat which is a peer-to-peer forum for SME operators. Bizchat has some strong Wellington ties in terms of sponsorship and subject matter expertise too.

Last but not least, ideegeo launched iWantMyName a domain registrar site with New Zealand’s largest selection of domain extensions by far and some interesting value added services to be announced in 2009. I’m proud to say we began earning export dollars from day one. Our iPhone application has also proven to be a hit with several hundred downloads in the first few days. So iPhone users can now search and register domains on the go. The road ahead may be challenging one for us all beset with competitor goblins and recessionary cave trolls, but at least we are setting off amidst good company.

The incoming National led government has (predictably) put the Broadband Investment Fund (BIF) on hold pending a review.  Parties who invested time and resources into making applications to the fund have consequently been left hanging because National wants to put its own stamp on the project.

One assumes that BIF applicants knew there was considerable political risk attached to participating in a funding round which came at the end of a government term. But the incoming Cabinet has an obligation to protect the interests of parties who applied in good faith. Developing business cases and filling out a myriad of forms is standard when it comes to securing any kind of public funding these days and this carries with it a hefty cost. Perhaps we should get the new Minister of Red Tape, Rodney Hide, on the case? Cutting back on petty bureacracy would be a great way of improving productivity in New Zealand.

More importantly, where will the new government go with broadband rollout as an infrastructural project? With National’s stated preference being fibre-to-the-home (FTTH), it is difficult to conclude that they have received a range of advice from independent telecommunications industry specialists. There are so many vested interests involved that one wonders where the Nats dredged up their policy advice from. Was it the foreign owned network infrastructure providers who stand to benefit from FTTH investment, or was it the telcos who want to extend their reach?

Indeed National’s apparently Telecom-centric broadband “vision” came under fire from Telstra boss Alan Freeth when it was announced originally. He argued that whilst subsidising FTTH may be a vote winner, that it will do little for the nation’s long term economic development. I’ve drawn this analogy before, if you build a new road you don’t need a bus stop outside every home do you? A lot of people never use buses. In other words, fibre-to-node makes much more sense.

Whatever the case, it appears more likely that decisions will be made on the basis of clever lobbying, rather than sound, independent research. Telecommunications technology is changing rapidly, but broadband infrastructure, once built, will be in place for years. Hence I’m troubled by Ernie Newman’s somewhat rosy assessment of the “rich tapestry” of network ownership that makes up the industry. It sounds more like a recipe for chaos to me, so I agree with his idea to develop a national broadband architectural blueprint. The more important issue of international connectivity has not yet been solved. So there is still a risk that, in the name of political expediency, we will end up with another half-arsed solution that does little to address our aspirations of climbing the OECD ladder.