Although first quarter VC disbursements into Mid-Atlantic-based companies have dropped off nearly 70% from Q1 2000, a handful of area companies still managed to open the funding faucet.
One such firm was Rockville, Md.-based B2eMarkets, which recently landed $38 million in its second round of venture financing. Newcomer CIBC Capital Partners led the transaction, and Series A players Accenture Technology Ventures, FBR Technology Venture Partners, Syncom, Carthage Partners and Ascend Venture Group all came back, participating at or above their pro rata rights.
The company elected to raise a decent amount of capital this time around in the hope that it would not have to return to the private equity market, said Ron Holtz, chief financial officer with B2eMarkets. In addition, B2eMarkets wanted to have more than adequate cash on hand in case it spotted a viable acquisition target down the line.
No Recession Blues Here
B2eMarkets may be one of the few companies that could actually profit from the economy’s lethargic temperament. Its core business is providing procurement managers at large corporations with Web-based strategic sourcing software that enables them to do everything from identifying vendors to gathering bids to hand-selecting suppliers.
“All the nuts and bolts to run a business from jet engine components to desks and chairs can be sourced through B2eMarkets,” Holtz said.
To that end, the slowing economy provides a window for B2eMarkets as businesses look to trim their bottom lines while continuing to try to grow their top lines.
“If [companies] are focused on their bottom line, they’re focused on costs, and that’s a huge opportunity for us as our clients [seek ways] to save money while operating their businesses,” he explained.
To date, the company has signed on 20 customers, including big-name players such as Praxair, Millennium Inorganic Chemicals and White Martins. The company has also forged strategic alliances with Accenture and Cap Gemini Ernst & Young.
“For a small company at this stage, their progress in pulling together an entrusted customer base with [clients] from all over the world and their established partnerships speaks volumes about how unique and important their [business] is,” said Teddy Rosenberg, a managing director with CIBC and B2eMarkets’ newest board member. “When you’re [an investor] looking at an economic slowdown, you’re looking at companies where you can measure a benefit to the customer, and that’s what these guys have.”
With the fund-raising process out of the way, B2eMarkets now plans to ramp up its sales and marketing staff and continue developing its product. It will also expand its operations in Europe, with particular emphasis on the UK, Spain, Italy, France, Germany and the Benelux region. Presently, 40% of the company’s customer base is in Europe.
While achieving profitability is first up on the radar, Holtz said he hasn’t entirely ruled out the possibility of an initial public offering. “The IPO markets will come back, it’s just a question of when,” he said.
Contact Robyn Kurdek.