Mitch Free has a knack for attracting high-profile investors to his manufacturing marketplace, MFG.com. First, Jeff Bezos convinced Free to back out of a previous agreement to sell the company and personally invested $14 million in September, 2005. Then Bezos put in some more money along with the German Samwer brothers (who founded Alando, Jamba, and invested in Studivz) in a $4 million round in January, 2007. Now, Free has raised another $26 million, nearly all of it from Fidelity (Fidelity Ventures and Fidelity Asia Ventures put in $25 million, the rest came from existing shareholders including the Samwers’ European Founders Fund). The big seller was founder and CEO Free, who sold a chunk of his personal shares in the company. With this funding, his stake went from a controlling 50 percent to less than 30 percent.
Never heard of MFG.com? You are probably not in the manufacturing industry. Founded in 2000 and based in Atlanta, MFG.com is an eBay for manufacturers—a B2B marketplace for sourcing manufactured parts from all over the world. Companies as diverse as Black & Decker, Harley Davidson, NCR, and Sara Lee use the site to find suppliers for machined parts, plastic moldings, metal stampings, and fabrications.
You can find nearly $50 million worth of requests for manufacturing quotes per day on the site, complete with CAD diagrams and other specifications. Manufacturers bid on the requests. MFG.com makes money by selling yearly subscriptions of several thousand dollars each to suppliers who want access to MFG.com’s community of purchasing managers and engineers at buying companies (who get to use the site for for no charge). Free learned that in the manufacturing world suppliers are much more willing to pay a flat fee than to give a cut of each transaction.
Over the past year, he’s been making a big push into China and connecting the vast network of manufacturing suppliers there with corporate customers all over the world. In part, that is what attracted Fidelity Ventures, which was an early investor in Alibaba and sold its stake to Yahoo. One part of Alibaba’s business is an online B2B directory. Fidelity’s Larry Cheng, who invested in Alibaba and now will take a board seat at MFG.com, told Free that he sees MFG.com as an “Alibaba on steroids.” (Cheng is also a board member of P2P lender Prosper). Daniel Auerbach of Fidelity Ventures Asia will take an observer seat on MFG.com’s board. Aurbach was previously an Alibaba board member.
Free has been known to talk smack about Alibaba, which recently had a successful IPO. He tells me:
The Alibaba model (directory “brochure-ware”) is not very deep but it was in step with the sophistication of the Chinese market. To truly remove inefficiencies in the manufacturing industry there has to be a platform that facilitates collaboration, transactions, negotiation, audit trails, intellectual property protection and more. MFG.com has built that platform and is preparing to scale it globally.
Free plans on using MFG.com’s new capital to continue expansion in the U.S., Europe, and China, as well as to ramp up in India, Japan and Eastern Europe. But he has greater aspirations for MFG.com than just to break into new markets. He wants MFG.com to become the “operating system for the manufacturing industry.” His acquisition in 2006 of SourcingParts.com gives him the technology and customer reach to build Web-based software for the manufacturing industry. He wants to build a platform similar to Salesforce.com’s AppExchange for manufacturing-oriented applications. He’s already gathered the community of purchasing and factory managers who might use such software.
Another possible use for that $26 million is more acquisitions. Free has talked to me about his desire to find 3-D search technology that can operate on a commercial scale to match an engineer’s CAD diagrams with the historical inventory of parts sourced on MFG.com. His idea is to offer a service that would allow engineers to estimate the manufacturing costs of their designs on the fly, based on the shape and materials of the parts they need. If he ever finds such a technology, now he has the money to buy it.
This is the first time I heard about MFG but it resembles MyPadz.com, a project I’ve been working on, a lot.
I had no idea there was so much money in the manufacturers market. I’ve been presenting MyPadz as a ‘next generation computer classifieds’ service. I’m thinking now that was a mistake.
Don’t stop thinking mistake – that’s a mistake.
At last not a useless web 2.0 company.
Finally a Web 2.0 company with some potential. VCs should have been all over this company as opposed to that Snail Mail startup and dozens of others with questionable business models.
Fleheheheh
“First, Jeff Bezos convinced Free to back out of a previous agreement to sell the company and personally invested $14 million in September, 2005.”
Do I smell burning? Must be something evil then
Having been in the mgf. world for a handful of years, this is just an awesome idea! Definitely could of made it easier for us when we were first starting out. I wish them the best of success.
We are on the same boat here.
There’s a huge potential in the manufacturing and industrial business.
We’ve developed an open platform to cater the industrial needs for online directory, location/mapping services, catalog and media management, recruitment and B2B services.
In the Asia and Middle East regions, a lot of supplier and buyers are still working using primarily fax and phone. Our platform acts as a gateway between them and the connected economy.
We want to be “the Alibaba of the Middle East”
oooo shit, alibaba is huge.
Interesting logo they have there, “Oh my fucking god, make something”
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If you’re a make-to-print parts buyer or supplier looking for a better alternative to mfg.com check out http://www.cMFGx.com.
My two person team launched this real web 2.0 application a few months ago with a couple thousand dollar investment and a lot of sweat equity. It has has buyer functionality that is superior to mfg.com’s and it’s cheaper for contract manufacturers.
Right now we’re offering free memberships to everyone until there is enough RFQ volume to warrant charging suppliers.
Also, I find it laughable how much hype mfg.com gets when their whole platform is based on a simplified version of the traditional RFQ to Quote process! You can’t route RFQs to potential suppliers based on multiple capabilities, you can’t create multi-line RFQs and you can’t easily add your own suppliers so that use can use their app as your primary sourcing tool.
You can do all of this on cMFGx.com!
I have used cmfgx.com, and find it quite buggy, plus the available buyers and suppliers are almost identical to mfg.com, so I am not sure what the benefit is, with an unproven marketplace.
I have submited RFQs and not had any responses, when I get multiple hits on mfg.com. It seems to me that the better platform is where I get the most traffic around my RFQs.
Just my two cents worth.
James,
Are you getting paid by MFG.com for that statement, because we don’t even have a registered buyer by the name of James Dermit?
And, by the way, our service just launched a couple of months ago and we do only have about 57 members, but, it’s also free-of-charge.
Above and beyond that, it’s a better RFQ creation and management application that puts the buyer in complete control of creation and distribution (unlike mfg.com).
We also plan to be upfront and honest with current and potential customers and will not charge a dime until RFQ volume warrants it.
Hey,
Check out the link below to view James’ LinkedIn profile:
http://www.link...lnk=vw_pprofile
Looks like he lives and works in the greater Atlanta area, which is kind of ironic because MFG.com’s headquarters is in Atlanta.
Thanks for the two cents!
I used MFG for a while. Fund it was not worth the money you pay to join.
How do you compete with someone willing to work for $5.00/hour
Or a guy in Chine that does the job for less then the material cost.
Waste of money.
I agree, MFG.com is a waste of money. Those guys charge upwards of $5,000 annually to suppliers. Check out http://www.mfgsucks.com to see how many people are pissed off at mfg.com
An excellent alternative to the costly mfg.com is http://www.MFGmatch.net – a FREE Custom Manufacturing Marketplace for both the buyer as well as the supplier.
check out cBoxBid.com for packaging…
I am in the middle of my first attempt at sourcing parats through MFG.com. They have taken their site down for 4 days, without warning… Not good.. Cant a company with this much $ on hand keep their site up? what is this, 1992?
That said, I can certainly feel for the ‘job shops’ trying to compete with big international style manufacturers.
I have heard a lot of bad things about mfg.com from small shops who got involved with them. For the project I am currently designing, we need a big shop that has several very expensive pieces of equipment. They will be able to provide our parts much cheaper than a small shop. Small shops run by non-innovative nuts n bolts types trying to make $50/hr with a run of the mill haas will have trouble with mfg.com