DemandStar, the open marketplace for bidding on government contracts, today announced that it closed a $2 million seed round to connect local governments with a greater diversity of businesses.

“When governments increase competition and bring the best of their local communities to the table, everybody wins,” said DemandStar CEO Ben Vaught. “This funding enables us to bring more governments and more businesses into the DemandStar Network.”

DemandStar removes friction from the massive, $1.5 trillion B2G market through an open platform that both businesses and governments join for free. Governments gain free access to a shared supplier base and powerful electronic bidding workflow tools. Businesses connect directly to government purchasing officers for free, with the option to pay to receive notifications of upcoming contracting opportunities.

The investment is led by Version One Ventures with participation from Advance Venture Partners, and Forefront Venture Partners. Version One Ventures is one of the leading investors in marketplace businesses across North America with a portfolio of dozens of successful platforms connecting buyers and suppliers in various industries.

“We are excited to partner with DemandStar and help businesses and government entities connect by posting and securing electronic bids through the online marketplace. We believe in their mission to improve and modernize what was once an antiquated system of connecting businesses to government work by making the process now more efficient and accessible for everyone,” said Boris Wertz, founding partner of Version One Ventures.