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B2B exchange builder wins funding in tight market

Despite congestion in the business-to-business sector and recent investor shyness, FreeBorders secures $25 million in its second round of funding.

Despite congestion in the business-to-business sector and recent investor shyness, FreeBorders, a maker of online exchange technology, has secured $25 million in its second round of funding.

This latest round includes an investment by Internet Capital Group (ICG) and an $8 million line of credit from IBM for its products. IBM and FreeBorders are working together to build the FreeBorders Private Trading Network, which is intended to enable buyers and suppliers in the apparel, textile and retail industry to do business online, the company said in a statement.

The announcement comes as investment in business-to-business ventures has slowed and as shares of e-commerce companies have taken a beating in the general market downturn that began in April.

Since the summer, experts have been warning that the vast majority of business-to-business virtual marketplaces will vanish within two years, as failures and consolidation sweep through the once high-flying sector.

But investors in San Francisco-based FreeBorders apparently see promise in a company that has mustered a large group of technology and business partners such as IBM, Crystal Group and TAL Apparel and that is working to streamline the business of buying and selling apparel and textile goods online.

"FreeBorders has secured this round of funding in an extremely discerning market, signifying a major endorsement from industry leaders" of the company's experience and business model, Ramsey Walker, FreeBorders' executive vice president of business development, said in a statement.

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