"We're looking for companies in a big market - $60 billion, not $1 billion or $2 billion," says Martin. "We're also looking for companies with a strong management team with domain expertise. People have tended to overlook that."
Startups in industries where dominant buyers or suppliers have announced their own marketplaces are having a tougher time getting VC backing. AviationX launched an online marketplace for replacement airplane parts earlier this year with $1.6 million in funding from Tim and Nick Stojka, cofounders of PlasticsNet.com, and WiredAtlantic, a private e-commerce VC fund.
But when AviationX CEO Henrik Schroder recently went looking for a second round of funding, he found few VCs eager to listen because Boeing, Lockheed Martin (LMT) and other industry giants had already announced that they were teaming up to build their own Web marketplace.
"It's a pretty tough period," says Schroder. "Many VCs seem to believe that big consortia of companies have an advantage over pure-play marketplaces because they bring their business to that marketplace. They hold the transaction hostage."
But Schroder, other entrepreneurs and venture capitalists all say there's a silver lining in the collapse of b-to-b stock prices and the sudden closing of the IPO window.
"In some ways, it's good because it will filter out some of the stuff that doesn't deserve to be funded," Schroder says. However, if the Boeing coalition and others fall apart in six months, it might already be too late for some ventures that do deserve to be funded.
