MarketSharing Bets Small Businesses in New York and Beyond Will Clamor for Daily Deals

5/18/11Follow @arleneweintraub

John Amato was working as president at New York ad agency Show Media when Groupon and other daily-deals sites started to take off a couple of years ago. Amato’s small agency rang up about $1 million a month in expenses, he says, which included buying iPods and other incentives for top-performing employees, and placing frequent food orders with SeamlessWeb. Amato, who also co-founded Show Media, was the guy who signed all the checks. “I thought, wouldn’t it be great if there was a service like Groupon for someone like me?” he recalls.

So Amato sold off his stake in Show Media in 2010, and today he’s launching MarketSharing, a business-to-business site offering discounts on food, products, and services. It works much like Groupon, but with a corporate twist: Office managers and others who are looking to slash their company’s expenses can sign up on MarketSharing’s site, and receive daily offers for discounts from local merchants ranging from 50 to 80 percent.

MarketSharing is currently operating in New York only, with plans to roll out five new markets by the end of the year. Possible cities include Los Angeles, Austin, San Francisco, Boston, Chicago, and Atlanta, Amato says.

Some deals the site offers will be strictly business. For example, one of MarketSharing’s flagship deals is $500 for $1,000 worth of services from TeamWorx, a Sacramento-based company that runs teambuilding programs for companies in several cities. In New York, one of TeamWorx’s most popular programs is the Amazing Adventure Race, which challenges executives to work together to solve riddles or navigate new neighborhoods.

Food delivery will be a big part of MarketSharing’s offerings. The company is launching in New York with a deal from SeamlessWeb, and it has also signed on Dunkin’ Donuts to provide $100 worth of deliveries for $50. Amato is confident entrepreneurs will take advantage of such deals—and he points to his own recent experience as proof. He and several of his developers were in the office all weekend, until 3 a.m. on May 16, testing MarketSharing’s site before the launch. “We ordered food five times that weekend,” he says.

MarketSharing has about 50 deals in the pipeline—way more than Amato expected, he says. With companies like Dunkin’ Donuts already doing a lot of their own couponing, it wasn’t entirely clear whether the business-to-business angle would resonate, Amato says. But he was there for the Dunkin’ Donuts sales call, and he remembers it being a fairly easy pitch. “There’s only so much they can do with the consumer walking in the door,” he says. “They also need to focus on the part of their business that’s about delivering to corporations, and we offered them a way to reach those people.”

MarketSharing raised $1 million in seed funding from K2Media and AppFund in late April, and Amato hopes to secure a Series A in the next 12 months. Amato’s own track record has served him well in the fundraising process so far. While at Show Media—which is best known for placing ads on taxis in NYC—he grew annual revenues to $15 million in less than four years and maintained cash-flow margins of 25 percent or more. “He had an incredible track record at Show Media, which has helped him build a great salesteam at MarketSharing,” says Daniel Klaus, who co-founded AppFund with Kevin Wendle, a co-founder of Fox Broadcasting Company.

Klaus says AppFund invested in MarketSharing knowing full well that competition would be a risk. Rivals include RapidBuyr, Bizy, and OfficeArrow. Will more competitors pop up? “No question,” Klaus says. But he believes there’s room for more than one player in the business-to-business deals space because of the vast purchasing needs of small companies. “A consumer buying a hair-removal coupon from Groupon is not the same as someone who’s growing a small business,” he says.

Amato believes MarketSharing stands out from other B-to-B sites because of its hyper-local approach. “Our model is to position ourselves as local experts,” he says.

No doubt MarketSharing will get some traction in the market for VC money, judging from the funding frenzy that has benefitted many daily-deals sites. Gilt Groupe, which sells high-end fashions and services in limited-time “flash sales,” raised a $138 million Series A in early May. Rival fashion site Ideeli scored a $41 million Series C in April.

And Amato was heartened to see New York-based Lot18—which offers discounts on wine—raising $10 million on May 2. “The total annual spend on wine is $18 billion,” Amato says. “The total annual spend by small businesses is $5 trillion. When you’re targeting that big a space, you’ve got to have a chance of becoming a winner.”

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