Freemarkets buys Covisint

Filed in archive Venture Capital on January 5, 2004

My sincere respect: Freemarkets the online sourcing company buys Covisint the online automotive marketplace. Freemarkets is one of the major competitors to my ex-company newtron. Freemarkets, the Massachusetts based company, has discovered first the clever business model to provide (consulted) reverse Auctions in US and always had a clever marketing approach.

Instead Covisint has always been the "ueberhype", started in the highest dotcom times with very abnormal expectations, we thought it would go the way of so many marketplaces. However it scored quite good in establishing a real sourcing business for it's funding partners and automotive suppliers. But this was done for a price! It's not surprising the announcement does not mention any valuation Freemarkets paid for Covisint.

"Covisint, whose investors include General Motors, Ford Motor and DaimlerChrysler, Renault, Nissan Motor and PSA Peugeot Citro�n, reorganized this year to focus on providing access to software and services, its chief executive, Bob Paul, who took over as chief executive in June, said earlier this year.

Covisint, which is based in Southfield, Mich., coordinates Internet auctions and give 93,000 users access to the automakers' software. About 35 percent of revenue is from monthly subscriptions and the rest from auction fees and other services, Mr. Paul said in July.

Covisint has revenue of about $60 million a year and was able to stop using investor cash for operations in June 2002, Mr. Paul said in the July interview."