An interesting aspect of Web 2.0 and all the hundreds of startups that sprung up as a result of it, is that so many have failed. Even more interesting is the fact that a few of the really fantastic ones are still progressing even without proper funding. I have seen so many millions of dollars invested in what you might call “dogs” of applications, while some of the most inventive and innovative platforms, for one reason or another, have not received their just due both in series funding and/or popularity.

This situation begs the question: “why do some startups, even really crappy ones, get relatively massive funding – while still other more substantial ones get missed?” I cannot answer for VC or other capitalists on this question, but I can point out a few startups that should have been looked at with a more intense magnifying glass. This is at least true for anyone wanting to make money on a startup that is.

The End All Application Of Money
Many of us have been searching for dramatic things from developers since this Web 2.0 thing started, and to an extent I think we have been disappointed. I cannot believe that Facebook, twitter or a host of other rather mediocre applications represent the “vision” so many tech bloggers and even investors had in mind as applications that would change the Web. Certainly, Facebook has been super popular and Twitter as well, but perhaps they are so popular because there simply is nothing better (or at least nothing has been brought to the forefront) to supersede them.

So, how is it that even a few fantastic startups get passed over in favor of lesser innovations? I can think of at least 3 super platforms or innovations that have had success even given some inherent problems in either their development or funding. Here is a brief rundown of three that are still being developed by brilliant people even though they were not inserted into the matrix with the best possible backing.

Iceberg On Demand - I broke the story of this killer business platform back in July, 2007 on ReadWriteWeb. Iceberg is essentially an all inclusive platform for creating any kind of business application or performing any business task without the need for a speck of coding. This may not sound all that earthshaking, but any business that has had applications built can testify to the horrors of having their apps created using code. Iceberg makes it possible to create these applications ( a host of them) in minutes rather than days or months.

In short, I cannot actually believe that Iceberg was not swamped with funding offers after I wrote about it. Wayne Byrne – Director of Development for Iceberg, has continued to improve and refine this great platform with only moderate funding. Essentially the platform has now become rather self funded when a modicum of serious investment could have spread this platform far past what Coghead or any other lesser startup could have dreamed of achieving.

Iceberg is simply superior to any viable business app platform on the Web. I know that the latest version is going to be out soon even without any alternative investment. This is a fairly great tribute to Wayne Byrne and the Iceberg development team. Someone should take a look at this, perhaps one of the investors who dumped 2 million or more on one of the “dogs” that shall go unnamed. Iceberg is about to launch their latest version on the shoulders of pure determination this month.

Second Brain – Back in May of 2007 I tested and reviewed what I was sure (and many others) would be the “go to” content library of Web 2.0. Second Brain is a super clean, useful and potentially great “all in one” platform. Of all the startups I can think of that inserted great innovation for Web 2.0 users, Second Brain is perhaps the most interesting. I talked with CEO Lars Tiegen just the other day and asked him candidly why Second Brain was not farther along than some lesser developments. Lars offered a completely honest and transparent explanation. Evidently though Lars’ genius and dedication to creating such a platform was rock solid, the people delegated to create the back end architecture simply did not build for the scale Lars and SB needed. Essentially, Lars has had to completely redesign the back end in order to proceed as planned.

To some extent, improper funding or mediocre press could have caused a problem here that was unnecessary. I know Lars personally, and believe me there is no more brilliant developer out there. The good news for him and Second Brain users and fans is that Version 2.0 is right around the corner, and from an insider’s perspective it is fairly awesome.

The point I am trying to make here for Second Brain is that with proper funding this development could make Facebook or all of the social content aggregators look like Web 1.0. This is true for any one of these three startups, and especially SB. A beautiful site, clean UI and unbelievable flexibility should and will spell success for everyone associated with this development. Second Brain is attempting to be the world’s best and largest online Library of content, and they are already doing it even with less than ideal resources. This is another tribute to the power of excellence and determination, and I can’t wait for this newest version.

JS-Kit - I tested and reviewed Js-Kit back in October of 2007. Of all the “widget” companies out there, this one has really exceeded all expectations. The comment, polls, review and Navigator widgets dispersed by this startup have gone so viral as to essentially cover hundreds of thousands of registered websites. This success can be attributed once again to the people behind the innovation. I know Khris Loux personally and it is actually quite unbelievable to discover the partnerships, collaborations and refinements to website tools this man and his team have parented.

Js-Kit did receive a decent series A funding round and Loux and company have made the most of it. The point is though, what could have been accomplished with some serious backing? If you thinhk about some goofy video site or music startup getting $2 million and failing, then our stated questioning becomes all the more relevant. I beg to offer another question: “Given all these obvious and upcoming developments and connections, why are serious investors not beating down the door of KIT?” I think the answer is that, like these other startups, sometimes the big money does not go where it will do the most good. I am not at liberty to spill their latest news, but I know everyone will be amazed at what KIT has accomplished in these last few months.

Conclusion – Dogs Versus Thoroughbreds
P.T. Barnum once said: “There is a fool born every minute.” When it comes to “stupid” money, there can be no doubt that Web 2.0 has been almost as wild as the Dot Com fiasco. I know that venture capitalists read my jargon and sometimes even act on these suggestions. I wonder why it is that many have chosen to throw money down the drain rather than investigate the potential that so many have outlined. Why bet on a dog when there is a racehorse waiting in the wings?

These three startups have crossed every hurdle where others faltered even with millions at their disposal. I don’t know what kind of logic system is necessary to see an obvious course here, but I do know what excellent is and these 3 will make it in any event. The point again is, why should they have a harder road than necessary when their merit is so clear? I remember talking to my great friend Dmitry Shapiro about funding issues early on in the Veoh development. He said that the key to Veoh success would be the patient and effective investors behind it. Veoh is the best online video aspect ever developed and a huge success.

I make this point only to illustrate just how powerful investor targeting can be. I think our friends with the “dough” should hear the wakeup call here. There are no 300 startups this year to chunk money at, so good advice would be to look to extremely viable ventures that would benefit from support. Over 2/3’s of the startups I have tested have failed, and these three show the most potential for growth of all the outstanding viable ones left.