Applico — a B2B distribution technology advisory firm -— has released its 2024 Top 50 B2B Marketplaces ranking and report.
A lot has changed since the previous edition of our rankings, with both a number of net-new marketplaces as well as some previously ranked marketplaces falling from grace. One big reason we saw marketplaces fall off the top 50: they are no longer in business. With the shift in venture capital and the funding environment, raising new equity capital has become a lot more difficult for tech startups. We saw several members of the 2023 cohort close their doors last year, with Renorun, which had raised $173 million in VC funding, being the most notable case.
While it’s not out of business entirely, Indigo Ag is another noticeable omission from the 2024 ranking. Previously in the top 10, Indigo raised a down round cutting its valuation by 94% to just $200m from a prior valuation of $3.5 billion, while also pivoting and shuttering multiple lines of business. Indigo has retrenched and shifted away from marketplace entirely, focusing more on its original Biologicals business that distributes crop inputs as well as its SaaS product.
Overall, new funding for the top 50 marketplaces in 2023 came in at just over $750 million, a precipitous decline from 2022’s more than $2 billion and 2021’s high-water mark of $2.4 billion. Current funding is closer to 2019 levels, which is in line with the broader retrenchment we’ve seen in the venture funding environment.
Similarly, the 26 fundraise events in 2023 is a substantial decline from 38 in 2022, and represents a five-year low in capital raises. However, the average amount of capital per deal remained high at $30m, demonstrating that marketplaces who have strong traction and business models are still able to find willing sources of funding. This flight to safety is good news for established marketplaces, such as LeafLink, a repeat member of the top 10, which raised a $100 Series D funding round in February 2023.
One other big change? In the last edition of the rankings, we highlighted several honorable mentions who were software as a service (SaaS) companies that were on the cusp of becoming marketplaces. This year, we have 7 companies included in the rankings that started as pure SaaS companies and have now become marketplaces. These include longstanding SaaS leaders like Service Titan and Acculynx, as well as up-and-coming tech startups like Kojo and Ferguson & Reece-backed Bluon.
These SaaS companies have typically started by providing software tools to the distributor’s customer, such as Acculynx, which provides the leading contractor tool for roofers. The SaaS company builds lock-in and demand with the customer, and then it adds integrated eProcurement to enable its users to buy from distributors and suppliers natively within the same tool the customer uses to manage their business.
Bluon, for example, started out as a diagnostic tool for HVAC technicians, with 300k+ HVAC unit manuals, parts lists by models, and free tech support. It grew to a market-leading position in this segment, with an estimated 52% of techs in the United States using its solution. After raising funding from Ferguson and Reece’s VC arm, Superseed, in January 2022, Bluon began to integrate distributors and enable its HVAC technicians to procure the products they needed. Its distributor-facing product offers a free tool giving distributors access to bill of materials, the ability to cross reference parts, match specifications and provide pricing and availability on products to Bluon customers. Today, Bluon acts as a full marketplace that charges a take rate to distributors and suppliers who sell to its customers.
Broadly, this SaaS-to-marketplace trend is especially noticeable in building materials, with 6 of the new SaaS entrants in this sector. The other, Torch Dental, is in dental supplies.
The ranking is focused on independent, product marketplaces operating in the U.S., as opposed to marketplaces for services. Public companies like Xometry — one of our top 10 marketplaces in the 2021 ranking — or Grainger subsidiary Zoro, wouldn’t be included.
The Top 10, and What They’ve Been Up To
Our top 10 list is as follows:
The new company in our top 10 this year, Acculynx, reflects the power of combining SaaS and marketplace business models. Like Bluon, Acculynx built a market-leading position with its contractor customers and then integrated and monetized distribution, using its demand-side dominance to accelerate supply-side adoption.
However, the rest of the top 10 have not rested on their laurels. GrubMarket, for example, also combines SaaS and marketplace business models. GrubMarket started as a marketplace, but it has scaled a parallel SaaS product to create lock in and recurring revenue, as detailed further in the report.
B2B retail marketplace Faire repeats as the #1 marketplace in our ranking, having announced a partnership with Shopify in September 2023. Shopify also invested in Faire as part of the deal. The two companies have similar target markets, with Faire CEO Max Rhodes noting they share a “like-minded approach to building tools that empower retail entrepreneurs to run their businesses as efficiently as possible.” The partnership will integrate Faire’s marketplace into Shopify and make it easy for Shopify’s retail users to order products from Faire.
Overall, the top 10 remains consistent and exhibited strong growth and ability to attract capital, even amidst a challenging venture capital environment.
See the Rest
For the full list of the 2024 edition of the top 50 B2B marketplace ranking, download the report here: https://bit.ly/47LIdCD
Besides the ranking, the full report also includes:
- Overview of new editions to the ranking, as Well as down rounds and out of business from the previous edition
- B2B marketplace insights – SaaS to marketplace convergence and emerging trends
- Capital raises in 2023
- Top VCs and Strategic Investments
- Honorable mentions
- Research methodology