CMGI Enters B2B
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CMGI Inc. enters B2B: Wait they're already there. Reporter@Large spoke with @Venture's General Partner, Brad Garlinghouse about CMGI's past success in B2B and the implications of its new @Ventures $1 billion B2B fund.
Aside from being an online advertising agency, e-business solutions provider and an operator of leading web companies such as top-tier portal, AltaVista, CMGI (CMGI) is best known for its ability to sniff out potential market leaders within the Internet space that are attacking enormous market opportunities.
Operating on a keiretsu model, the holding company then invests in, incubates and cross-promotes the partner companies. (Keiretsu is a Japanese business practice where a family of inter-related companies are able to share best practices throughout a network).
Investors to this point have rallied behind CMGI's seemingly flawless investments in consumer oriented issues (B2C). But on Nov. 22, CMGI (CMGI) announced the launch of its $1 billion @Ventures business-to-business (B2B) fund...the incubator's fourth and largest fund, to date. The company's past three successful funds, had a combined capitalization of just $380 million.
Evaluating CMGI's past investment success and realizing the enormous market opportunities within B2B e-commerce, Investors pushed CMGI's stock 18-3/8 higher, or 15 percent, to 143-1/4 on the day of the announcement. The stock has continued climbing and was trading at 205-3/4 at Tuesday's close.
I believe investors may have overlooked the fact that a quarter of CMGI's investments already occured in the B2B space, prior to the new fund. Never the less, Investors had good reason to cheer the announcement of such a fund. Brad Garlinghouse, a general partner of @Ventures(CMGI's Venture Capital arm) agreed. We spoke with Brad about CMGI's already successful efforts within the B2B space and the potential for the company's new B2B fund.
Reporter@Large: Is it a misperception that @Ventures has not been active in the B2B space prior to this fund?
Garlinghouse: Definitely. In fact we have been amongst the most successful venture capital investors in the B2B space over the past several years. @Ventures was the seed investor in a number of the most notable B2B success stories. In fact in 1999 alone we had 3 IPO's that are pure-play B2B investments: Chemdex (CMDX), Critical Path (CPTH) , Silknet Software (SILK) . All three today have market caps in excess of $2 billion. Vicinity, another B2B portfolio company is in registration right now.
Reporter@Large: I know you hold interesting investments in the private market as well.
Garlinghouse: We have invested in a number of emerging leaders in the B2B space prior to this most recent fund: FindLaw, OneCore.com, BizBuyer.com , NextOffice and Intelligent/Digital are all great examples.
I think we will look back a year from now and find that some of our portfolio companies that dominate their consumer categories today will be major players for B2B. A great exampe of this is CarParts.com.
Reporter@Large: So we're seeing leverage between the business-to-consumer and business-to-businessa