Venture Firms Back eMarketplaces

The democratization of the Internet continues to expand into new business sectors. eMarketplaces has identified fragmented businesses in product-centric markets as an area that would benefit from an online marketplace and is trying to fill that void.

“We are delivering vertical marketplaces to fragmented, primarily no-tech’ consumer goods industries that generally have no marketplace outside of trade shows,” said Cynthia Rogers, the company’s new president.

The company has targeted trade show companies as potential partners and currently works with George Little Management and Miller Freeman. Rogers identified gifts, housewares and gourmet food and beverage as areas that the company will target this year.

To support this effort, eMarketplaces raised $5 million recently in its first infusion of venture capital. The investment was led by and its founder, Naveen Jain. Additional capital commitments came from Acorn Ventures, Wheatley Partners and Pilgrim Baxter.

Rogers said the company intends to use proceeds from the offering as working capital to increase the number of partnerships to 10 by year end and to build market share.

The company has built four revenue streams into its business model. The first is subscription services, which will allow sellers to build or create their own site. The others include advertising, which will be sold against user profiles, transaction services and a credit approval facility.

“There is no credit factoring ability in these markets right now,” Rogers said. “We will offer net 30-day credit approval.”

In addition, the site will offer ancillary services to the small business customers, including membership reward programs, industry employment boards, private label credit cards and logistics services.

Rogers said the company plans to close another private equity round “very quickly.”