Michael Brown of Bowery Capital and Kelli Fontaine of Cendana Capital discuss trends and themes using Cendana Capital manager data.
In 2020, we released a large content series focused on B2B Marketplaces. We had been investing in the category of companies since our 2014 Transfix investment and wanted to go deep on our thinking and learn from others. We’ve kept up investing in B2B Marketplaces, with portfolio companies like Reibus, Expedi, and GraphiteRX furthering our themes and ideas. We've seen some of our themes come full circle with liquidity in companies like VNDLY. For this series, we covered history lessons from the prior era of companies with a focus on learnings from winners in the B2B Marketplaces category. Next, we interviewed founders who launched companies over the past ten years. Finally, we spoke with several leading B2B Marketplace investors. Below is a compilation of the work. Our aim is to update this periodically to give founders and investors additional perspective.
Conversations With Founders
Ryan Smith (LeafLink). Ryan has built one of the largest B2B Marketplaces in the cannabis space focused on connecting brands and retailers. He’s learned a ton in a really challenging operating space with a lot of state by state restrictions.
Randy Altschuler (Xometry). Randy has created a B2B Marketplace for on-demand custom manufacturing bringing better price discovery and improved sourcing to a previously opaque market. He offered us some great insights around how B2B Marketplaces can create value for all participants.
Drew McElroy (Transfix). Drew co-founded Transfix, a leading freight B2B Marketplace. He spoke with us about scaling, the role of domain expertise in building a marketplace, and the problems he focused on addressing when looking for initial market traction.
Dan Magnuszewski & Joe Neiman (ACV Auctions). Dan and Joe co-founded ACV Auctions, an innovative B2B marketplace for the wholesale automotive sector. They spoke with us about their journey scaling ACV and offered up some insights on the value of domain expertise in launching a vertical marketplace.
Alexander Reichert (AgVend). Alexander is the Co-Founder and CEO of AgVend, an innovative B2B platform changing how agricultural products are bought and sold. He spoke with us about building an ag input marketplace and the ways AgVend is working to modernize how buyers and sellers transact.
Victor Hunt & Aaron Resnick (Astorian). Victor and Aaron are the Co-Founders of Astorian, a B2B marketplace matching property managers with contractors. They joined us to discuss how Astorian designed its marketplace to fit the unique needs of supply and demand in the contracting space.
Marten Mickos (HackerOne). Marten is the CEO of HackerOne, the leading hacker-powered security marketplace. He spoke with us about HackerOne’s unique role in the security landscape and the ways their marketplace has been able to create a place where new types of security relationships can occur.
Elizabeth Iorns (Science Exchange). Elizabeth is the Co-Founder & CEO of Science Exchange, a marketplace for scientific research services that matches traditional pharma companies with academic institutions and contract research organizations. She joined us to discuss this unique services marketplace and some of the ways it is modernizing scientific research.
Amol Deshpande (Farmers Business Network). Amol is the Co-Founder & CEO of Farmers Business Network, a leading independent ag tech business that offers solutions around direct-to-farm commerce, crop marketing, financing, and sustainability that help family farmers reduce costs and increase crop value. Amol spoke with us about his experience building FBN and where he sees the platform heading in the future.
Adam Sandow (Material Bank). Adam is the Founder & CEO of Material Bank, a B2B marketplace serving the architectural and design industry. Adam joined us to describe Material Bank's unique value proposition and its highly innovative use of sampling to help A&D buyers and sellers transact.
John Armstrong (Reibus). John is the Founder & CEO of Reibus, a leading B2B marketplace for the steel and aluminum industries. John shared what he has learned on his journey founding and growing Reibus and offers some tips around the value added services marketplaces can offer their participants.
Tyler Ellison (ChemDirect). Tyler is the Founder & CEO of ChemDirect, a modern chemicals marketplace serving a broad array of industries and buyers. Tyler sat down with us to shed some light on ChemDirect's journey to date and to share his marketplace learnings.
Aeroxchange. Founded in 2000, this is your classic consortium marketplace focused on aviation. The business is supply chain focused (MRO) and there are a lot of takeaways. It is run today by one of the original employees who has been with the company since 2001.
Alibaba. Founded in 1999, Alibaba has grown from a B2B Marketplace focused on Chinese SMB’s to a tech powerhouse with offerings ranging from cloud computing to financial services. Alibaba is a prime example of how B2B Marketplaces tend to broaden their features and userbase as they mature.
IronPlanet. Founded in 1999, IronPlanet is a B2B marketplace focused on heavy equipment. It is a case study in how marketplaces have found innovative ways to assure the quality of the goods being transacted. IronPlanet was purchased in 2016 by auction powerhouse Ritchie Bros. for $775 million.
Elemica. Founded in 2000 by a consortium of chemicals companies, Elemica is a great example of marketplace participants coming together to create a B2B sales platform and of how marketplaces can expand their offering over time.
uShip. Founded in 2004 by a trio of UT-Austin MBA students, uShip shows how a well-functioning marketplace can be win-win for all participants, and is a great example of how partnerships with more established companies can be really helpful for driving platform adoption.
Quadrem. Founded in 2000 by a consortium of market leaders in the mining sector to offer global procurement solutions in remote locales, Quadrem was ultimately acquired by Ariba in 2010. Quadrem’s story shows how a marketplace can use an industry-by-industry path to grow its user base over time.
Jaggaer (f/k/a SciQuest). Founded in 1995 by laboratory supply specialists, Jaggaer is an interesting example of a marketplace migrating from a standard e-commerce site to a more full-spectrum e-procurement suite.
E2Open. Founded in 2000 by a consortium of leading electronics companies, E2Open was launched to develop supply chain software and marketplace solutions. Today, the company is a global provider of cloud-based, on-demand software enabling a variety of enterprises to procure, manufacture, sell, and distribute products more efficiently.
Copyright Clearance Center (CCC). Founded in 1978 to serve the academic reprint market, CCC has grown into a global broker for a wide variety of content licensing use cases. CCC is an example of how consistent innovation around product can help a marketplace stay relevant.
Global Healthcare Exchange (GHX). Founded in 2000 as a joint initiative by five of the leading medical product manufacturers, GHX has become the leading online marketplace for medical supplies. GHX is a lesson in how early support from major suppliers can help solidify a marketplace’s position within an industry.
Conversations With Investors
Robin Dechant (Point Nine Capital). We chatted with Robin about a number of topics and lessons around B2B Marketplaces. Point Nine is a prolific business software investor and Robin and Julia write quite a lot around this concept.
A.J. Rohde (Thoma Bravo). We spoke with A.J. about B2B Marketplaces as an asset class and what factors determine a marketplace’s success. A.J. is a Partner at Thoma Bravo which has been a leader in B2B Marketplace investments (both control and minority).
Fabrice Grinda (FJ Labs). Fabrice spoke with us about some of his own criteria for evaluating marketplaces. He is the co-founder of FJ Labs, an early-stage fund and venture studio, and is among the world’s most active angel/seed investors.
James Currier (NFX Guild). We spoke with James about what he looks for when evaluating new marketplace investments. James is a prolific B2B investor in his role as managing partner of NFX Guild and is also an accomplished serial entrepreneur.
Mike Droesch (Bessemer Venture Partners). We spoke with Mike about B2B marketplaces and what he is currently seeing as an investor in the space. Mike is a vice president at Bessemer Venture Partners and he serves on the boards of Tackle and Cypress.
Varun Parundare (Accel). Varun joined us to discuss growth levers for marketplaces and the range of value-added services today’s leading marketplaces are implementing as they continue to scale.
Bob Solomon (Software Platform Consulting Inc.). Bob joined us to discuss the evolution of B2B marketplaces and some of the ways this generation of marketplaces are driving monetization and retention.
Charles Hudson (Precursor Ventures). We spoke with Charles about how he evaluates B2B marketplaces and what are some of the indicators correlated with long-term marketplace success.
Sarah Tavel (Benchmark). Sarah offered up some valuable marketplace insights and shared her thinking around key metrics and what is needed to build enduring marketplace success.
Merritt Hummer & Allison Xu (Bain Capital Ventures). Merritt and Allison joined us to discuss how they look at marketplaces from the perspective of growth investors, as well as some of their recent marketplace investments.
ACV Auctions. ACV Auctions is one of the first of this generation’s B2B marketplaces to go public and its S-1 is a unique chance to look ‘under the hood’ at the economics of a vertical marketplace that has achieved public company scale. The company was founded in 2015 and went public in 2021.
Xometry. Xometry is a modern marketplace for on-demand manufacturing processes including CNC machining, die casting, and 3D printing. The business was founded in 2013 and went public in 2021.
The Bowery Capital Team discusses early stage go-to-market strategy with the Revenue Council
The Bowery Capital team is doing deep dives on various companies, interviewing founders and investors, and learning what it takes to build success in the B2B Marketplace arena. This week, Tyler Ellison, Founder & CEO of ChemDirect, answers some of our questions.