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Investment Thesis: B2B Marketplaces

Thomas Wisniewski

Thomas Wisniewski

Investment Thesis: B2B Marketplaces

As thematic investors in the expansive B2B SaaS world, NVP leans into specific verticals and business models where our relationships, industry insights, and data have helped us develop a clear point of view.  The resurgence of B2B Marketplaces is one of those models, where we believe that powerful trends—including generational shifts, economic pressure, verticalization—are creating big opportunities. We’ve been watching unicorns in the space like Flexport and Tradeshift, and we believe there is room for new players in verticals that have yet to realize the benefits a well-run and specialized marketplace can create.

Our experience in the supply chain market was an inflection point in this process. NVP investments in FleetOps and OFE are examples of B2B marketplaces within the freight and trucking industries themselves.  FleetOps uses a marketplace model combined with data science and AI techniques to enable brokers to find drivers with available capacity, while OFE is a marketplace for bulk ship chartering – both of which stand to cut costs, increase profit and reduce downtime for their customers.  While we dove into these companies for the value they bring to their supply chains, we felt that the B2B marketplace model was poised to disrupt a much broader set of industry verticals. 

This conviction that vertical-specific marketplaces stand to gain traction is now playing out through investments in companies like GearFlow – a marketplace for heavy equipment parts for the construction trades, and Agilis which connects chemical suppliers to manufacturers.  The experience of their founding teams within their respective industries allows them to better understand the specific needs of their customers, as well as develop stronger trust when it comes to regulations, processes, and common conventions that are industry-specific. They are delivering value by improving product discovery, price transparency, quality assurance, payment facilitation, and uniting fragmented supply and demand.  

Finally, we’ve all seen eCommerce tools and platforms transform consumer commerce with the online marketplace model.  We believe the model will have a similar impact on B2B commerce, which often relies on offline processes or outdated tech.  After all, consumers can order nearly anything they want online, why shouldn’t managers at construction companies or manufacturers be able to do the same?  That’s a question that millennials and GenZers are asking as they work their way up the corporate ladders – and this generational shift is helping to sustain the trend. 

As a part of our thematic research, we looked at all the B2B Marketplace start-ups that closed Seed and Series A rounds since January 2021. When these 120 investments were broken down by industry vertical some broad trends became visible.  Roughly half consisted of B2B marketplaces for targeted sectors of labor/staffing such as healthcare and media, marketplaces supporting commerce in consumer packaged goods, and NFT marketplaces. Labor and CPG marketplaces appear saturated with capital and big players. Depending on how you view NFT marketplaces, they are either an extension of the creator economy – which is also saturated – or they are simply a fashionable trend. In both cases, not an attractive investment area for us.  

However, the other half of these investments in B2B marketplaces were in blue-collar industries such as construction, manufacturing, industrial equipment, raw commodities, and agriculture. Those are the areas where we felt our investments could make the most impact, grow the greatest returns, and where we could find unique and innovative founders that could benefit from our team’s expertise (which includes Managing Partner Tom Wisniewski’s experience building B2B Marketplaces since the 1990s and Operating Partner Kevin Petry’s leadership role growing Groupon – one of the original marketplaces).

As we look to our next investments in the space, we’ll be looking for founders that have deep industry experience in the vertical of focus. We’ve found that one of the things that successful B2B Marketplaces have in common is that the tech often already exists – and that development focuses on adapting it to the specific market vertical. A barrier to success here is a resistance to tech adoption, so teams attacking this with a focus on relationship building and workforce efficiencies are the ones that achieve lasting traction.  B2B Marketplaces are a great example of a startup space that doesn’t require cutting-edge new technology – but needs smart, tech-savvy founders that want to build a better way to participate in the industries that they love.

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