5 Cool Start-Ups to Keep an Eye On

Budding small businesses poised to make it big.

July 9, 2010 — -- Every company starts small. Facebook began as a Harvard networking site, Starbucks as a small Seattle coffee shop and Microsoft was famously started in a garage by a college dropout.

It's easy to explain in retrospect what made these companies succeed. But looking in real time at a cluttered landscape of fiercely competing small businesses, it's difficult to pinpoint potential winners. ABCNews.com asked savvy venture capitalists for their predictions for the big companies of the future. Here are five of their top choices.


What It Is: "Zoom does for retail what ATMs did for banking," says Gower Smith, founder and CEO of ZoomSystems. The company's Zoom Shops are automated shopping kiosks that sell customers everything from iPods at airports to acne cream at Macy's. The San Francisco based company is planning to expand into apparel next.

Why We Need It: Zoom Shops combine the efficiency and information wealth of online shopping with the instant gratification of regular shopping. It allows companies to set up shops in confined areas – airports, casinos, college campuses -- where they might not otherwise have access.

Bare Facts: The first Zoom Shop launched in 2005, and the company, with 125 employees, now has 1,000 kiosks scattered around the world. Macy's has outsourced its entire electronics department to Zoom Shops.


What It Is: A website where consumers can buy discount coupons for services in their neighborhood. For $39, for example, you can buy a month-long membership to your local gym that would ordinarily cost $135.

Why We Need It: People like to save money. "Groupon is a very simple but very valuable service," says Roger Lee, general partner at Battery Ventures, which funded the Chicago-based start-up. He points out that Americans spend 80 percent of their income within 10 miles of their home, and they are apt to jump on an opportunity that gives them a targeted chance to save.

Bare Facts: Groupon was founded in 2008 and now has 300 employees and thousands of members in the U.S., Canada and Europe.


Why We Need It: If it works, Wowd could be a better way to search since it generates results based on what's popular, not based on what's been optimized best for detection by crawlers.

Bare Facts: Founded in 2007, Wowd has 30 employees around the world, and offices in Palo Alto, Portland Oregon and Belgrade. Almost 200,000 clients have installed its software, allowing their website visits to be tracked by the search engine.


Why We Need It: It's an untapped market for fun. Now that the world's population is increasingly going online for entertainment, companies like Zynga have a unique chance to draw in a new generation of video game players. "The growth of the U.S. virtual goods market, particularly inside social games on Facebook, has been tremendous over the last year," says Justin Smith, founder of gaming research firm Inside Network, valuing the U.S. virtual goods market today at about $1.6 billion. "As the largest developer of social games on Facebook, Zynga is poised to ride the growth of this market."

Bare Facts: Zynga was founded in 2008 and now has 600 employees. More than 65 million users play Zynga games every day, helping build 30 million FarmVille farms in the U.S. alone.

Hello Wallet

What It Is: A website that gives low and middle-income Americans financial advice. In return for a monthly fee starting at $4, members can plug in their financial profile and get personalized recommendations for a college savings plan or a cheaper bank in their neighborhood.

Why We Need It: "Financial literacy in the U.S. population is challenged, and here is something that will give them actionable advice," says Don Rainey, a venture capitalist with Grotech Ventures who has invested in Hello Wallet. Its service is different from Mint.com's because its focus is forward-looking, helping users piece together the financial future they want, as opposed to simply analyzing their financial history.

Bare Facts: AOL co-founder Steve Case is an investor in Hello Wallet, which was founded earlier this year and is still in Beta testing. Fortune 500 companies have already expressed an interest in signing up their employees for the service, according to Rainey, and the City of San Francisco is offering the service free to residents and workers.