B2B marketplaces are the fastest-growing channel in business digital commerce. But investors are getting pickier and big money deals are not as frequent. Still, investor money is flowing. Here are 3 key takeaways on B2B marketplace investing from an interview Digital Commerce 360 had with Bowery Capital CEO Mike Brown.
Bowery Capital is an investment management firm focused on B2B marketplaces and similar categories.
Three key takeaways
1. Why is there a pullback in B2B marketplace investing?
- “The multiple compression in the public B2B marketplace players is causing the risk/reward to be very challenging downstream relative to other venture style business models.”
- “We are entering digital maturity in a lot of industries and there are a fair number of sizable, venture-backed companies.”
- “Competition and not wanting to back a fourth or fifth company in a well-funded space has caused a lot of the slowdown.”
2. Where are investors putting their skin in the game?
- “We still see a lot of activity in the markets that generally have the largest spend and are shifting the fastest to a digital twin.
- “Transportation and logistics, construction, healthcare, and wholesale continue to be verticals that see funding activity.”
3. Which B2B marketplaces are getting funded?
- A look at 13 recent transactions reveals a wide range of investor totals. For example, in February, ShiftMed raised $200 million. ShiftMed is a B2B marketplace for health care systems looking for help such as traveling nurses.
- On the other end of the spectrum, ePallet in August raised $5 million in new cash from Bowery Capital to expand. EPallet is a B2B marketplace that restaurant chains, franchises, and other companies in the hospitality industry use to get manufacturer-direct deals.
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