B2B exchange making move to B2G

Onvia.com Inc., a business-to-business exchange for small companies, will

soon target the state and local government market with the help of DemandStar.com

Inc., a business-to-government e-commerce provider that unites local government

purchasers with suppliers.

Onvia announced last week that it plans to acquire DemandStar.

DemandStar already does business with more than 200 government agencies

in 26 states. The company's clients include: San Antonio; San Jose, Calif.;

Las Vegas; Norfolk, Va.; and Hamilton County, Ohio. Onvia helps small businesses

by aggregating demand and providing a place where the firms can buy and

sell products and services.

"Why we acquired DemandStar is because of its leadership position in the

state and local space...and we want to catapult them into that space a lot

more quickly," said Gretchen Sorensen, vice president of corporate affairs

at Seattle-based Onvia. "They have about 100 employees and a sales staff

of 30, and we plan to take advantage of that."

DemandStar — which will become a wholly owned subsidiary of Onvia, pending

government approval — hopes to get stronger from the deal, said Sam Chesser,

a spokesman for Plantation, Fla.-based DemandStar.

"We have been successful with government agencies across the country, and

Onvia has essentially explained to us that they want us to continue doing

that," Chesser said. "Our mission is to continue doing that and there is

no foreseeable change in business for DemandStar."

The acquisition of DemandStar, which should be finalized by March 1, 2001,

based on the approval of the company's shareholders, is the second such

move in the B2G space for Onvia in the last six months. In July, Onvia acquired

Globe-1, another B2G exchange that manages government buyers in more than

25 markets, including some in the federal space, Sorensen said.

Onvia plans on keeping Globe-1 focused on the federal markets as well

as state and local opportunities, while DemandStar will continue to expand

its customer base with cities and counties, she said.