What role does a venture catalyst play in the development of a B2B business?
A venture catalyst is basically a person who accelerates the business. For any business to take shape from the idea stage to its actual implementation, you need a lot of time. Individuals have to tie up sources of funds, tie up with an investment banker, embark on an advertising campaign and tie up with a public relations agency. It is here that the venture catalyst can accelerate the process and narrow down the time required by a Netpreneur. Once funding in the form of cash or equity is tied up, Coolstartups.com earns a referral fee from the Netpreneurs.

In a way, we are doing a huge service to venture capitalists and angel investors on the Net. Any Netpreneur who wishes to avail of our services has to fill in a standardised form on the Net. This form passes through an in-house filtering process where a due diligence is done. Between the three founder members, we have evaluated as many as 700 companies.

There is a huge potential for Internet investments in India. Being an Internet-based company, our costs are low and at the same time we can reach out to a large number of people. As far as our promoters are concerned, they have primarily invested in technology, Internet and the media. However, as far as evaluation of Internet companies in India is concerned, there is no preferential treatment accorded to any one of our promoters.

How is the B2B business different from B2C?
There is a thin line of difference between B2B and B2C. This difference thins down further when it comes to small enterprises. The B2B business requires an extensive domain knowledge. If I am trying to sell machinery on the Internet, I should know the psyche of the buyers and the sellers before evaluation.

Consider the example of lathe machinery which is used for cutting and shaping machines. I need to put up details on my site saying that the machinery is available for sale. However, things just do not end here. The buyer clearly needs to know the maximum diameter of the bar he can cut before he buys the machine. Similarly, if I were to set up a site for the auto industry, I should know how the auto industry operates. I should know about the inventory required, the working capital cycles and credit periods in the industry, among other things.

Compared to this, the B2C industry requires certain skill sets which enable you to understand the retail customer who buys a toothpaste or a shirt.

Take the case of advertising. Many B2B companies advertise in the print media spending huge sums in the process, which may not be needed at all. It is time that companies in the B2B business realise that B2B and B2C are two separate businesses in themselves and they differ in the way they operate.

Which industries do you think lend themselves to B2B e-commerce?
Industries which lend themselves to the B2B segment should typically have certain characteristics. The market should be fragmented and there should be more than three to four layers of intermediates. Take the case of the yarn industry which involves three to four stages before the finished product is turned out. It is here that the Internet can effectively step in.

If I am a programmer-producer, I will have to carry production clips of my programmes to contact television channels. Here, the distributor would end up taking as much as 30 to 40 per cent of the proceeds. However, you have no other option than go through the distributor since you do not have the marketing reach. It is here that one can start a B2B site which can link all the programme producers from around the globe.

So, a B2B model will work in all those industries where products are more standardised.
Consider the textile industry which involves a lot of processes, from the start to the finish. Typically, between the yarn stage and the finished product stage there are at least three to four stages of intermediation. These layers of intermediation have the potential to make the industry lend to the Internet. Similarly, industries such as chemicals , textiles, engineering, travel and financial services can lend themselves to B2B e-commerce.

Who would be an intermediary in a B2B model?
One must understand that a B2B model is much more than a mere online model. One must realise that the brick-and-mortar model will always remain the primary model, while the Internet will be the facilitator. B2B e-commerce has just begun and one is yet to see successful models. Take the case of Esteel.com which has all buyers and sellers under one platform. Here the buyer asks for samples before making a purchase. He can order in batches if the quality is found to be good.

What is hindering the growth of B2B e-commerce?
B2B e-commerce has a long way to go in India. I think it will take at least a couple of years before the B2B industry can really pick up. We need to have secure payment systems for which we need payment gateways to be put in place. Not just that, we need validation and certification systems.

So, all these effectively mean that B2B e-commerce has a long way to go. I think it will take at least a couple of years before we can see some successful B2Bmodels out there.

What is a good B2B site?
A good B2B site should complete any transaction. Consider this example. A B2B site dealing in welding electrodes should list all those who are supplying welding electrodes. B2B sites should have people from the industry and those who have an established network within the industry. You have to give them access to your network.

The disadvantages of bringing persons from within an industry is that you bring along baggages and blind spots and they are not ready to innovate. One must have teams which are complementary and have domain knowledge. That is the right mix. One should have domain experts and strong networks in the industry and one should have a large sales force specific to an industry.

What is your advice to someone who is looking for mere valuations in the industry?
Valuation comes when you build a business and have a strong concept. Another thing which can give credibility and higher valuation to your site is this: have members of the concerned industry on your site. It would do your site good, if you had some level of corporate involvement. Basically, my advice to B2B Netpreneurs is this: you should look at developing businesses and valuations would automatically follow. Be proactive in inducing a transaction on your site.