SalesForce

Handshake raises $8 million to become the Salesforce of wholesale

March 31, 2014: 7:30 AM ET

The company's mobile SaaS platform has processed $10 billion in sales.

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FORTUNE -- In the middle of the dotcom bubble, a Goldman Sachs study predicted that by 2005, the web would drive $4.5 trillion in business-to-business sales. Meaning, online wholesale would be an even bigger business than consumer ecommerce.

Ten years later and that prediction hasn't quite come true. Oracle estimates there's another $300 billion in B2B sales online.

But we might finally be ready for reality to catch up to those bubble-era predictions. They weren't bad ideas as much as they were ahead of their time. Today, many of the dotcom-era's biggest failures are experiencing a profitable revival. See Instacart, which takes up the torch of Kozmo.com, or Wag and Petflow, which deliver pet food in the vein of Pets.com.

The B2B e-commerce category experienced a few of its own flame-outs: The most notable was Chemdex, an online marketplace for chemicals and biotech products. It went public in 1999, hit a valuation of $4 billion, and was promptly shut down by 2001.

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But like the pet food and grocery delivery categories, the world might finally be ready to adopt B2B ecommerce at scale. Mobile sales teams are now equipped with iPads, and companies are finally trading their stalwart paper invoices and email attachments for cloud-based systems.

One startup poised to take advantage of the burgeoning market is New York-based Handshake. Founded in 2010, Handshake charges companies monthly fees (typically around $50 a head) to use its mobile sales platform. The company has now processed more than $10 billion worth of transactions.

Today Handshake announced it has raised $8 million in Series A funding led by Emergence Capital Partners. Seed investors SoftTech VC, MHS Capital, and High Peaks Venture Partners participated.

Handshake's ultimate goal is to become a sort of Salesforce for wholesale. If the company can build up a strong enough network of buyers and sellers on the platform, it will be powerful enough to "cut across all of the back-end systems the same way Salesforce has," says CEO Glenn Coates. The eventual goal is to become the gold standard, working "across so many people in any one industry where it becomes impractical to do wholesale in that industry if you're not on Handshake, the same way its impractical to do CRM without Salesforce," he says.

For that, Handshake has tapped the right investors. Emergence Capital is known for its SaaS prowess: General Partner Gordon Ritter co-founded the web services platform Software As Service with Marc Benioff. He eventually backed Benioff and Salesforce as Emergence Capital's first investment. Emergence has also invested in platforms like Yammer, which sold to Microsoft for $1.2 billion; SuccessFactors, a performance management software company which went public in 2007 and eventually sold to SAP for $3.4 billion; Veeva Systems, which recently went public and is valued at $3.3 billion; and Box, which is on the verge of a highly anticipated IPO.

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Kevin Spain, a partner with Emergence Capital who led the deal, says he chose to pursue Handshake over other startups in the category because of its horizontal approach and the team's technical prowess. Digital wholesale competitors like Joor and NuOrder are focused on the apparel industry, for example. Spain believes a vertical approach may make it hard to expand later. Handshake is used by thousands of salespeople, and it has thrived in industries with high margins, such as the outdoor and sporting goods industry, and the eyewear industry, Coates says.

The fresh capital will help Handshake develop web tools to complement its app, Coates says. The company will release a desktop storefront tool, because, even as the world moves to mobile, "We can't survive on mobile alone," he says.

Adding to its new web focus, Handshake crossed a milestone straight out of the dotcom era: After four years of focusing on its mobile app, Handshake bought itself a grown-up web domain: This week the company transferred its site to Handshake.com.

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