MFG.com Manufacturers $26 Million in Funding
We got word yesterday that MFG.com scored $26 million in a round led by Fidelity Ventures and Fidelity Asia ventures. Even though it seems there are fewer funding deals happening in the sector, this round is further proof that some ventures are still getting dollars. In some cases, big dollars. What made MFG.com interesting enough for Fidelity to take such a plunge? We reckon that investors are tired of traditional enterprise software and SaaS deals. Instead, they're looking for new business models that leverage not only technology, but advertising and content as well. Certainly, Fidelity is banking on the fact MFG.com has the opportunity to be the next Alibaba in China and beyond as well.
In our office, we've used both Alibaba and MFG.com on global sourcing projects -- in some cases, the same project -- and found MFG.com more useful for identifying suppliers which are more appropriate for industrial products sourcing. In general, it's been our observation that MFG.com's built-in sourcing capabilities are excellent for build-to-print parts compared with traditional vendors in the space without a direct material orientation, though MFG.com's existing end-to-end sourcing capability is rudimentary compared with the traditional vendors. Alibaba's global sourcing capabilities, in contrast, serve as more of a type of Chinese business yellow pages where it's hard to distinguish manufacturers from trading houses. Still, given the increasing challenges and costs with China sourcing of late, MFG.com will have to look to new markets -- or focus more on serving the Chinese market domestically -- if it is to grow into the type of multiple and valuation that its investors are no doubt expecting.
- Jason Busch and Lisa Reisman
Just a quick postscript to our original post ... I find it absurd how some blogs like Techcrunch with no knowledge of a core business draw comparisons such as Alibaba and MFG.com without exploring the details or interviewing experts. It's sensational, shoddy journalism -- not even blogging. If they bothered to pick up the phone and call me, Lisa, Michael Lamoureaux, Mickey North Rizza, Debbie Wilson or another expert in the space, they'd realize that comparisons to Alibaba are misleading and that what MFG.com could become is much different indeed. Simply eating a vendor interview hook, line and sinker is something I expect from Purchasing -- not other bloggers breaking news and covering the sector. Seriously, guys. You've got a responsibility here as bloggers breaking news. Pick up the phone or reach out to your network to get an informed expert opinion. - Jason
In our office, we've used both Alibaba and MFG.com on global sourcing projects -- in some cases, the same project -- and found MFG.com more useful for identifying suppliers which are more appropriate for industrial products sourcing. In general, it's been our observation that MFG.com's built-in sourcing capabilities are excellent for build-to-print parts compared with traditional vendors in the space without a direct material orientation, though MFG.com's existing end-to-end sourcing capability is rudimentary compared with the traditional vendors. Alibaba's global sourcing capabilities, in contrast, serve as more of a type of Chinese business yellow pages where it's hard to distinguish manufacturers from trading houses. Still, given the increasing challenges and costs with China sourcing of late, MFG.com will have to look to new markets -- or focus more on serving the Chinese market domestically -- if it is to grow into the type of multiple and valuation that its investors are no doubt expecting.
- Jason Busch and Lisa Reisman
Just a quick postscript to our original post ... I find it absurd how some blogs like Techcrunch with no knowledge of a core business draw comparisons such as Alibaba and MFG.com without exploring the details or interviewing experts. It's sensational, shoddy journalism -- not even blogging. If they bothered to pick up the phone and call me, Lisa, Michael Lamoureaux, Mickey North Rizza, Debbie Wilson or another expert in the space, they'd realize that comparisons to Alibaba are misleading and that what MFG.com could become is much different indeed. Simply eating a vendor interview hook, line and sinker is something I expect from Purchasing -- not other bloggers breaking news and covering the sector. Seriously, guys. You've got a responsibility here as bloggers breaking news. Pick up the phone or reach out to your network to get an informed expert opinion. - Jason
I've read the TechCrunch post on the subject and don't understand the issue in your postscript. The TechCrunch article is intended for a different audience to SpendMatters et al - and seems to me to make a good summary, e.g. "Larry Cheng, who invested in Alibaba and now will take a board seat at MFG.com .... sees MFG.com as an 'Alibaba on steroids'".
And regarding how different MFG.com is to Alibaba, TechCrunch talks about MFG.com wanting to become a platform akin to Salesforce; again this seems to me a fair enough way of communicating the story to their readership.
What is it you feel they are missing?
Thanks for your note. Techcrunch ticked me off for a couple of reasons in their analysis. To begin, they had jumped the gun on the news. It came out today, but their post was yesterday (so they clearly had the exclusive or broke an embargo -- one that I was under). That’s OK, but if you’re breaking news, you have an obligation to go beyond the superficial Wall Street hoopla that accompanies such a funding round. Rather, they had the obligation in my book to really explain what MFG.com does, how it works, how it actually compares with Alibaba, solicit expert opinion, etc. But instead, Techcrunch launched into marketing regurgitation drivel interviewing the funders rather than those who could shed some real light on what this means for manufacturers and those who should care. For example, to call it a "platform" like SF.com is a superficial cop-out. It's so different than SF in my book (and I say this as a user). This type of reporting is a pattern of Techcrunch, IMHO, a blog that gets far more play than it should. All sizzle and no steak.
- Jason