Online B2B marketplace Kinnek, which enables thousands of small businesses to find suppliers and manage purchasing, on Monday (Sept. 15) announced its has raised $10 million in a Series A funding round. The New York-based company says it plans to use the new funds to grow its marketing and engineering capabilities and fuel expansion into new industries.
Matrix Partners led the financing round with participation also from previous investors that included Sierra Ventures, Version One Ventures, Naval Ravikant, CrunchFund, Richard Chen, TriplePoint Ventures and Benjamin Ling.
Karthik Sridharan and Rui Ma co-founded Kinnek in 2012 after they found purchasing operations of small and midsize businesses (SMBs) to be antiquated. Its biggest customer categories shopping on the site include restaurants, bakeries and food manufacturers, but it wants to use its new funding to expand into more categories.
Buyers pay nothing to use Kinnek, whose revenue comes from seller subscription fees and sales commissions, Sridharan noted in an Internet Retailer article, declining to provide specifics. “As buyers enter information on what they want to purchase, Kinnek uses algorithms to match their request with what is available from suppliers and alerts them when new products become available that might meet their needs,” the article notes.
Helping small businesses was the impetus for starting Kinnek, Sridharan, also Kinnek CEO, said in the funding announcement.
“SMBs are stuck in a no-man’s land when it comes to purchasing – they can’t go to Amazon to find what they are looking for, and they also don’t have the resources of a Fortune 500 company with complex software systems and dedicated purchasing teams,” he said. “Our goal is to build a marketplace that empowers small businesses to find suppliers as easily as their larger counterparts.”
Commenting on Chinese online marketplace Alibaba’s impending U.S. initial public offering in a Venture Beat article, Sridharan said investors view Kinnek as possibly “the next generation, kind of like an Alibaba for small businesses.”
As Kinnek’s leaders see it, the company is part of a new wave of startups focused on leveraging technology to improve traditionally “unsexy” B2B areas. Its target customer base are the 4.7 million U.S. SMBs that represent $2.2 trillion in annual aggregate spending on supplies and equipment.
Some investors already consider Kinnek to be an “Alibaba” for U.S. small businesses. “Kinnek is busting open a dramatically underserved market by filling a void with a simple, transparent solution,” Josh Hannah, Matrix Partners general partner and now a Kinnek board member, noted in the funding announcement. “SMB owners can now outsource all of the headaches so that they can focus on what’s really important, and that’s growing a business.”
And Kinnek’s Ma, who also is the company’s chief operating officer, contends the startup community, despite the huge opportunity, has neglected small businesses. “These millions of businesses deserve a modern solution,” he said.
Kinnek already has helped thousands of companies find the right suppliers and compare customized quotes. In a blog post on Kinnek’s website, Ebahi Ejerekhile, an event assistant at sports and new media agency event coordinator Legardere Unlimited, noted the company recently used Kinnek to find suppliers for some promotional materials for a large event.
“We’ve had so many participants sign up, and we wanted to get them glassware as a thank you to show our appreciation to these runners for putting their trust in our planning. People love pub glasses and actually keep them, so we wanted something universal, versatile, and branded,” Ejerekhile noted. “Being able to send out one request and get several quotes back made the process easier. I originally thought I would have to use several sites and put in requests with multiple suppliers, but with Kinnek, I only had to do it once. I was able to get me multiple quotes, and Kinnek was the only site I needed to use.”