Vertical Markets gets the B2B model right

A new business-to-business company focusing on creating online communities appears to have all the ingredients for a successful internet startup, including proven management, venture capital funding and an IPO later this year.

Backed by a $15 million investment from Allen & Buckeridge, Vertical Markets officially launched last night and expects to have its first online business community live by July this year.

Peer Nielsen, CEO of Vertical Markets, said the company plans to develop specialised online communities for professionals and suppliers in focused industry sectors including life sciences, dentistry, electrical engineering, veterinary and government.

Using a combination of technology developed inhouse, bought from vendors and supplied by partners, Vertical Markets will build websites providing content, access to training and B2B transactions for related products and services.

"We're really focused on trying to assist business communities," he said. "The technology is really the least of it. Our idea is that (professionals) will have our (specialised) website as their home page. They will ideally go there to get the answers to their professional questions," Nielsen said.

"There is a lot of talk in the market about B2B. We believe there are only going to a couple of winners. We will be one of the winners."

According to Nielsen, the company expects to generate revenue from four separate streams -- advertising revenue, subscriptions to specialised information, contractual revenue including online auctions, and training revenue.

The company's offline activities which include some trade publications will also continue to generate revenues. Late last year Vertical Markets acquired several publishing assets from Reed Business Publishers.

"There's no assumption that (our offline activities) are going away -- they may change in character. It will be dictated how we can best service the communities," Nielsen said.

David Spence, founder of OzEmail and recently appointed chairman of Vertical Markets, said Vertical Markets' multiple revenue sources will be a successful strategy for the company.

"Vertical Markets is very focused on re-engineering the industry to provide low-cost solutions. With the combination of multiple revenue streams, we will focus on re-engineering the industry so (there's) a low cost solution. It's the right strategy," Spence said.

According to Nielsen, while Vertical Markets has no plans or need to raise additional capital at the moment, the company is looking for strategic partners and, like many internet startups, is planning to float later this year.

"We are not concerned about the recent market . . . if you have a fundamentally sound business model and story to put forward to the market there are no concerns," he said.

Nielsen added that Vertical Markets' first portal for the science market will be launched in July or August. An electrical service is expected to be launched four to six weeks later, he said.

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