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Cape Town - A technology idea is just that; and has no intrinsic value until someone has invested to extract commercial value out of it.
That's the word from a tech incubator who has responded to accusations of exploitation.
"I think most aspiring entrepreneurs in SA unfortunately have a misperception about entrepreneurship and also about developing an idea. An idea is just an idea and the value it holds, unfortunately equals to nothing," Martin Ras, Byte Orbit chief operations officer told Fin24.
The company has run the Startup Knight competition which is similar in function to a tech incubator as the winning start-up gets cash and Byte Orbit takes a minor equity share.
Some Fin24 readers said that this amounted to exploitation because the entrepreneur could stand to lose millions on a successful idea.
Tech incubators
Even once an individual or small group has built a start-up, it doesn't automatically follow that they will be the next Google or Facebook.
In fact, Google founders Larry Page and Sergey Brin first tried to sell their search technology to internet companies of the time before taking in angel funding of between $100 000 and $200 000 from Ram Shriram in the early days of what has today become a global internet giant.
While mobile app stores boast thousands of applications for download, it does not follow that developers are automatically making money from these programs.
"Our analysis shows that most mobile applications are not generating profits and that many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun," said Ken Dulaney, vice president and analyst at Gartner.
Even popular applications do not necessarily make money for their developers. (Duncan Alfreds, Fin24)
The incubator model has demonstrated its efficiency in being able to accelerate good ideas into commercially successful companies.
"An idea only starts to hold a value once the idea gets transformed into a realisation ie tangible product that is built. Once built it still holds little value, and the value only gets exonerated once the product gets executed successfully in the market place," said Ras.
However, history teaches that a number of good ideas were stolen from inventors who have been forgotten.
Opportunities
While X-Ray photography has been attributed to Thomas Edison, the real inventor was Wilhelm Röntgen and similarly, it was Hans Lippershey that built the first telescopes in 1608, not Galileo.
By the same token, investors have been taken advantage of by unscrupulous conmen who have over-promised and under-delivered on innovation.
It is prudent that both entrepreneurs and investors should carefully investigate each other to ensure that they are operating from a position of integrity.
While internet has presented massive opportunities for creating value both in existing companies and new ones, Ras urged entrepreneurs to take a realistic view of their ideas.
"If someone feels their idea is getting exploited, perhaps they should take a step back and really think about the value proposition they have, before claiming that it is holding value and that it’s the next Facebook."
Entries for Startup Knight 2014 close on 26 October and after multiple judging exercises, the winners will be announced on 8 November.
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