Online marketplaces are all around us: some are B2C marketplaces, such as Amazon and Aliexpress, others are B2B marketplaces, like Global Sources and DHgate.
Yet have you ever seen a platform where small businesses can buy other companies, or parts of them, and even purchase commercial property?
A New Breed of B2B Marketplaces
These new platforms are essentially B2B marketplaces that take a different approach: instead of dealing with single items, they establish long term partnerships.
For example, let us say that you want to sell candies in China. Under the traditional scheme that you find on Alibaba or Tradekey, you will set up your online store and then sell batches of candies to retailers in China that want to buy them.
This new breed of platforms instead works in a different way: you will not sell candies, rather you will find a long-term distributor in China that is going to sell your sweets for a long time.
Since they operate with deals more than products, these platforms are called dealmaking or matchmaking platforms.
Since a deal is a deal, what is the difference between proposing a long-term manufacturing agreement and a direct investment in the business?
Because that is actually a private equity investment. After that, the next step is of course real estate.
The European Scene
The European economy may have had its good share of problems, but compared to the United States, where the market for private equity companies have been maturing for years, Europe still has a long way to go.
Valuations are definitely more attractive (just look at the public markets to get an idea) and while you will not find the technology unicorns that are so common, perhaps even too common, in Silicon Valley, there is plenty of opportunities in more traditional sectors such as luxury, industrial, food and beverage, and consumer goods.
From what we observe, many European SMEs are at their third or fourth generation. In many cases, the current owners, heirs of the founder, wish to sell and do something else.
As per real estate, opportunities are a bit more limited as investors tend to flock to former imperial capitals such as London, Paris, and Madrid. The last ten years have also seen a tremendous rise in the price of real estate in Germany on the back of the country’s strong economic performance.
3 Platforms for Small and Medium Businesses
The three platforms that I am going to describe all have their own idiosyncrasies, yet they share the common features of being dedicated to providing long term partnerships, investments in real estate and private equity, and of being focused on Europe.
Founded in 2018 in Italy, Globartis differentiates from its older cousins by being a 100% technology-driven platform. In fact, there are no partners, banks, or governments involved in the registration process: companies are required to give information about their businesses and are admitted based on the marketplace’s algorithm. Moreover, the minimum deal on the platform is as little as 10,000 US dollars, therefore it is accessible also by micro businesses.
However, being the youngest one has its drawbacks: the platform has the lowest amount of opportunities among the three (around 2,000), and, whilst it strives to expand beyond its domestic market, it is still focused mainly on Europe.
Enterprise Europe Network
Backed by the European Commission, Enterprise Europe Network (EEN) is a government-owned pan-European marketplace. Established roughly 10 years ago, it is on the oldest B2B marketplaces in Europe. EEN currently counts more than 6,000 partnership opportunities from the whole continent (also the UK and Switzerland are included). An interesting perk is that it is completely free.
The only problem with EEN is that, while getting admitted immediately, companies cannot interact with each other directly but have to go through an intermediary: in EEN’s jargon, a partner. This is usually a governmental agency or a not-for-profit organization, whose first priority, as you may be thinking already, is not rushing to close your deal.
Based in Barcelona, Spain, this marketplace was established in 2014 and boasts a portfolio of thousands of highly selected businesses. In fact, businesses cannot join Opportunity Network (also called ON) as if they joined any other online service: in order to register, companies must be invited by a bank that partners with the marketplace.
While this assures a high level of trust within the network, it also limits its potential as a global marketplace: most recently ON is also turning to small businesses, but up until now its minimum requirement for a single deal was as high as one million US dollars, off-limits for most SMEs!