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Onvia.com: Is There Big Business in Small Business?

Glenn Ballman started his business in 1996. Like a typical start-up, he launched operations from his home.

But by 1997, he got a lease and had about six employees. By early 1999, the company received $11.7 million in venture funding. As of March 2000, there was an IPO, raising $230 million.

What was the company? Well, it was Onvia.com , which is an e-marketplace for - ironically enough - small businesses.

The site is comprehensive. First of all, there's a B2B auction that connects small-business buyers and sellers. At the auctions, you can buy or sell used and refurbished merchandise. There are more than 130 categories. In fact, you can even find businesses that are for sale.

Next, you can do Request for Quotes (RFQs). Need a Web page? Need health insurance? With an RFQ, yu can get proposals for many common small business services. There is a 94% response rate for the service. What's more, Onvia.com has been adding new features, such as lead tracking, lead filtering and seller ratings.

There is also the "Purchase Now" center. Here, customers have a wide selection of about 70,000 products. There are even interactive tools to search for the products that meet personalized requirements.

Onvia.com has been making acquisitions. One was for Zanova, which provides hosting and catalog services for small businesses. It is a subscription business that has high-margins and that Onvia.com can quickly monetize with its sizeable user base.

Speaking of monetization, Onvia.com has been showing strength in its financials. In the past quarter, sales were $29.3 million, which was a 721 percent increase from the same period a year ago and a 36 percent sequential increase. But losses are heavy: $34.7 million.

Like many other IPOs from early this year, Onvia.com's stock has been quite volatile. The high was $78. Now, the stock trades at $6.

Nonetheless, in quick fashion Onvia.com has established itself as a leader for small business, as there are more than half a million small businesses registered with the service. Futher, the company has been focusing its energies on high-margin businesses - such as auctions, hosting and RFQs - which should help eventually to give the down-and-out stock price a boost.