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HubStorm Wins $5m Funding for B2B Marketplace Hosting

HubStorm Corp announced Tuesday (Aug 1st) that it had received $5 million in first round funding from Softbank Venture Capital, the venture capital arm of Internet behemoth Softbank.

In a June article that appeared on ZDNet - part of Ziff Davis, formerly a Softbank property - Bill Burnham, general partner at Softbank Venture Capital, argued that what he called "meta networks" would turn the B2B marketplace industry into a commodity industry. He wrote, "Exchanges won't matter. At Softbank Venture Capital, this realization has led us to invest in private B2B companies focused on technology and services, such as Perfect.com, Syntra, and Hubstorm, rather than the high-flying industry exchanges."

Although other companies have similar offerings, HubStorm appears to be the first company that focuses exclusively on enabling Internet-based markets.

HubStorm's entry-level service, HubLightning, provides basic B2B marketplace functionality and is due to launch in August. It will be priced on a subscription basis, and although specific pricing information was not available at press time, Dean Drako, HubStorm's president and CEO, told ASP-News that it would be as low as a few thousand dollars per month, or even less in some cases. He added, "Our objective is to bring net markets within reach of mid-sized and small businesses, and in particular startups."

HubThunder, a premium service, will provide more complex features, such as auction, bid/ask, catalog aggregation, and other transaction-based technologies. It will be available in Q4, 2000. Available now is HubTornado, a customized net market service that includes consulting, implementation, and customization by a team of net market experts. It includes HubPublish/B2B a marketing application that employs viral marketing and other techniques.

One of HubStorm's key proprietary technologies is called Market Self-Classification. It enables participants in the net market to self-publish content, providing added value for participants and lowering maintenance costs for the net market maker.

"Our ASP model is a new way for net market makers to build and maintain net markets," said Drako. "This outsourced model, combined with our patent-pending publishing technology, significantly lowers the total cost of ownership for net market makers. The combination accelerates the time to market and minimizes deployment and maintenance costs — all important considerations for successful net markets."

Drako told ASP-News that although SoftBank does provide incubator services, "we didn't need most of those services." He also founded EmailSolutions Inc., now BoldFish, and is also President of AllPublish.com, one of HubStorm's technology partners. He was previously president and CEO of Design Acceleration, Inc. and from 1993 to 1995 was VPof product engineering at the 3DO Company.