Seth Sternberg, who helped launch instant messaging service Meebo only after several other failed entrepreneurial ventures, kicked off the Launch: Silicon Valley event for startups on Tuesday with this sobering comment: "Whatever your idea is, absolutely, without a doubt, 10 other people have the same idea."

Judging by the startups that won the most praise at Launch, there's nothing wrong with buiding a startup in a well-worn business sector as long as you can improve on the old model.

The annual one-day event, hosted by Microsoft Corp. [MSFT] and the Silicon Valley Association of Startup Entrepreneurs host to showcase promising new startups, lets the audience pick the most exciting participants. Most of the winners -- such as online recruiting site Dayak, as well as Triggit, which offers an easy way to add advertising to a Web site, and Sensear, an Australian company whose technology combines speech enhancement and noise suppression to improve communications in high-noise environments -- are companies that address exsiting businesses with an enhanced product or service.

Chris Gill, President and CEO of the SVASE, said this year's presenting companies were selected from 270 submissions, which represented an increase of 50% over last year, as well as what seemed to be an improvement in overall quality. SVASE narrows the submissions by having at least two members of its advisory board review and grade the companies, accepting only those that receive an "A." After some 46 companies made the cut, the group drilled down further into the business models to make final selections.

As with an earlier generation of Internet startups, Gill said the toughest task facing the current batch is to monetize their businesses. "The biggest challenge in all these is to come up with a robust way to generate revenue, as it's unlikely that offering something for free and then relying on Google ads will do the trick," he said.

As for that other problem, of at least 10 other people having the exact same idea, Meebo's Sternberg offered this advice: Don't rush to raise venture capital. One of the most common mistakes young entrepreneurs make, he said, is to focus too much on raising funds or marketing the business before a sound business is in place. Entrepreneurs who are out promoting themselves early on really should be at home writing code, he argues.

 "It's a race to execute," Stemberg said. "You have to make sure you are doing everything you can to run as fast as possible." --Andrea Orr

See June 11 post on Dayak from Tech Confidential