CMGI Plans $1 Billion B2B Venture Fund

In yet another indication that the B2B Internet industry is overtaking the retail e-commerce sector, leading Internet network CMGI (Nasdaq: CMGI) announced today that it is starting a B2B venture fund that is aiming to reach $1 billion (US$) in capital.

The Andover, Massachusetts-based company — which is widely recognized as one of the premier Internet industry networks — said that the success of the B2B companies in its current @Ventures fund dictated that it start a fund focused strictly on the industry.

Nearly two-thirds of the company’s current fund consists of B2B companies, including Chemdex (Nasdaq: CMDX), Silknet (Nasdaq: SILK), BizBuyer.com, and others.

“This is a natural extension of our expertise and allows us the latitude of deeper investment into the B2B arena,” said CMGI CEO David Wetherell. “We continue to believe that the B2B market will be a major growth sector of the Internet economy, and one which we are poised to leverage within the CMGI network.”

Where Others Follow

CMGI is fast becoming one of the dominant companies in the industry, and some analysts rank it behind only AOL in terms of its Internet holdings. Japanese investment arm Softbank would probably dispute that ranking, as would some others, but the fact that CMGI is mentioned in the same breath is indication enough of how influential the company has become.

The company booked fourth-quarter revenues of $53.6 million and a total of $175 million for the year.

In September alone, CMGI bought Web marketing services companyAdKnowledge for $193 million in stock, acquired online advertising services company AdForce (Nasdaq: ADFC) in a stock-for-stock deal valued at $500 million and bought Internet payment provider Cha! Technologies for $12.5 million.

Busy Quarter

In the fourth quarter, CMGI invested in 20 Internet companies. It took initial stakes in AuctionWatch.com, BizBuyer.com and PlanetOutdoors.com, to name a few.

The company also made follow-up investments in a number of companies, including MotherNature.com, eCircles.com, and Furniture.com. Both Furniture.com and MotherNature.com are scheduled to go public soon.

This latest fund, which will be run by its seasoned @Ventures team, will probably spark an even keener interest by others in B2B companies. CMGI said it would be the sole limited investor in the fund.

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