Mapping The B2B Vertical Marketplace Ecosystem
We have talked a lot about B2B vertical marketplaces here at Bowery Capital and covered key insights driving this overall concept as well as some of the major factors that contribute to company success. Something we have not touched on has to do with the current landscape and in particular how large are the largest companies in these verticals. As a result, the Bowery Capital team put pen to paper and looked at 100 companies operating a B2B vertical marketplace. Specifically the team covered financings in the space, GMV on respective platforms, transactions, and finally founding year after narrowing the larger list down to those that were largest. This painted a great view of where we are at in the industry and the potential white space for emerging founders. Below lays out several key takeaways from our research.
1. Minimal Liquidity Points To Recency Of Category & New Ideas. B2B vertical marketplaces have not seen much liquidity to date. We count no IPOs in this ecosystem and there really are only two exits of significance. First, IronPlanet – a marketplace for used heavy equipment operating in the construction vertical – sold in 2016 to Ritchie Brothers for $758MM. Second, Elemica – a marketplace for process materials operating in the manufacturing space – sold in 2016 to Thoma Bravo for a very large sum north of $1B. Of the roughly 30 companies we identified in our set, over 70% were started after 2010.
2. The Race Is On In The Auto, Transport & Logistics Vertical. The Auto, Transport, & Logistics vertical has been very attractive to investors and entrepreneurs. We count seven large companies in the space operating today. Flexport – a marketplace for freight forwarding – has raised $200MM to date and already does north of $1B in GMV despite being founded in 2013. uShip – a B2B vertical marketplace for LTL shipping – is the oldest in the vertical having been founded in 2003 and now doing north of $150MM in GMV. Others like Transfix, Trucker Path, and Cargomatic round out the freight category while companies like ACV Auctions are disrupting the wholesale vehicle auction space.
3. The Manufacturing Vertical Contains The 800lb Gorilla Of The Ecosystem. Elemica takes the cake for largest B2B vertical marketplace by a long shot using our definition. The company has raised over $100MM since inception in 2000 and does a whopping $400B in GMV annually through its network. Founded in 2000 by eight well-known investors from the chemical industry, the platform allows companies like BASF, BP, Continental, The Dow Chemical Company, DuPont, Michelin, Shell and others to buy their materials and products through a curated marketplace.
4. Joor Is Likely The Most Capital Efficient New Entrant. Founded only six years ago, New York based Joor does roughly $7B in GMV annually with only $20MM of capital invested. The company is an online marketplace serving the wholesale industry and specifically operates in the retail vertical. JOOR’s clients include approximately 1,500 brands and more than 155,000 retailers, including Bergdorf Goodman, Saks, Inc, Harrods, LMVH, Kering, Richemont, VF Corporation, Kate Spade, and Kellwood Company.
**Notes: Think we missed something? Shoot us an email at firstname.lastname@example.org; We only include pure-play B2B marketplaces that have 80%+ of their GMV coming from a particular vertical — For example, Alibaba and Kinnek serve SMBs in general versus SMBs in a specific industry; We leave out any companies that have not raised over $10MM in institutional financing; We leave out service based organizations that, in our view, have not made the migration to digital — For example, DistributionNOW (Oil & Gas) or Coyote Logistics (Auto, Transport & Logistics) connect the most supply and demand in their industries but 80%+ of the revenue continues to come from service revenues; We do not include financial services in this report given it would be too long (i.e. all the exchanges like IEX are more than the entire report); All data is North America only and from Crunchbase and Google.
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