Announcing our investment in DemandStar, a marketplace for government procurementMarketplaces / Social / Collaboration / Network Effects
Today we’re excited to announce that we led DemandStar’s $2m seed round. The Seattle-based company provides an online marketplace for business-to-government commerce – it connects local and national suppliers with government procurement officers.
It should come as no surprise that government procurement is riddled with inefficiency. $1.5 trillion is spent in the local government procurement market, but billions are wasted due to scarce competition and outdated processes. Even today, much of government purchasing and bidding relies on manual, paper-based processes. When software is used, it’s old, complicated and not user-friendly. And there hasn’t been a platform to bring government agencies and suppliers together.
DemandStar opens up this market to a modern process. It creates frictionless connections between government agencies on one hand and suppliers on the other. The DemandStar network is a win for both sides: local businesses can win contracts for projects that they never knew existed, and governments gain access to more competition for cost savings and better value.
We recently wrote that B2B marketplaces need to nail four things: aggregate product catalogs, automate procurement processes, increase trust/social proof, and integrate with key services in the ecosystem. DemandStar is on a great path toward executing against all four of these opportunities.
The platform currently has nearly 600 government entities and more than 100,000 suppliers, including construction, education, healthcare, landscaping, and more. We are excited to be partnering with Ben Vaught and his whole team on the journey forward.
P.S. They’re hiring!