Rakesh Sood, a general partner at Sprout Group, a venture capital affiliate of Donaldson, Lufkin & Jenrette, said it all at the GroundZero 4 B2B conference in Los Angeles this month: "Technology investors have been like kids playing soccer, chasing the ball in one group from one corner of the field to another."
Truer words were never spoken. You dont have to be a soccer parent to get the point: that randomness and mob mentality rules most investment strategies these days.
Despite the B2B marketplace shakeout, venture capitalists and other investors are still bullish on the future of B2B. Its just that few opportunities are going to be found in the exchanges themselves. Rather, as a five-person panel of VCs (including Sood) concluded, the best bets will be in enterprise software that can bolster infrastructures and in exchanges that are grounded by mature industry partners.
One venture company that embodies the current shift in investing strategies is Crosspoint Venture Partners. The Woodside, Calif., company recently suspended a planned $1 billion fund. In the wake of that news, Crosspoint Managing Partner John Mumford was on stage at GroundZero with the principals involved in the funding of e2Open, a high-technology marketplace whose founders include IBM, Nortel Networks and other heavyweights. Mumfords take: "Our feeling is that if collaborative marketplaces are done right, they can be the largest businesses of the 21st century, and e2Open can be the poster child of B2B."
The operative words are "if done right." Still, its pretty optimistic, given the current climate. But Mumford and other analysts think that e2Open, like other new exchanges, has learned from the mistakes of predecessors and filled gaps in experience, quality and leadership.
In its selective B2B investments this year, maybe Crosspoint can separate itself from the pack of soccer youths, score a goal for its investors and start a new trend for the B2B industry.