VCs Exchange $18M With HotDispatch

Pumping a bit of VC juice back into the dehydrated b-to-b online marketplace sector, HotDispatch Inc. recently raised $18 million in its second round of institutional financing. Not only does the deal seem to buck recent market shifts away from all types of online offerings, but the Mountain View, Calif.-based company may eventually swim upstream against an even stronger public market current.

“We don’t plan to raise money for another 18 months,” said Mike Kaul, chief executive with HotDispatch. “We would hope for that to be in the public markets.”

The most recent transaction was intended to bring in an investor who could help provide entrees into the enterprise market, and HotDispatch landed such a partner in lead buyer WorldCom Ventures. No specific purchasing or technology-sharing agreement between the two firms was included as part of the Series B deal, but Kaul hinted that such an arrangement could be in the works.

Steve Mooney of WorldCom Ventures has been added to the HotDispatch board.

Additional participants included existing backers SAP Ventures, New Enterprise Associates and Accel Partners.

“We’ve built an online marketplace for trading technical expertise,” Kaul said. “More specifically, the site allows software developers to exchange technical questions and answers and also exchange code.”

The company also works with leading technology vendors to help develop co-branded technical information exchanges. So far, HotDispatch has signed up such industry heavyweights as Sun Microsystems, Palm, IBM and Caldera Systems.

In fact, it is these partnerships that investors seem to have latched onto while shunning other b-to-b exchange companies.

“The company isn’t really a b-to-b exchange anymore,” said Stewart Aslop, general partner with New Enterprise Associates. “We’ve found that where we’re getting traction is in supplying this turnkey system to technology providers.”

He added that HotDispatch should be able to achieve profitability under its current model with or without an additional round of private or public financing.

“They’re doing well and should be able to make it with what they’ve got,” he said.

As for whether these pairings will help HotDispatch sidestep the pitfalls stumbled into by its b-to-b online marketplace peers is yet to be seen. Not surprisingly, however, Kaul is exceptionally optimistic.