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2015’s Most Intriguing B2B Venture Capital Trends

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B2B venture capital activity this year was anything but consistent. Some weeks saw hundred-million dollar investment rounds; others, a modest few millions of dollars funneled into just a couple of startups.

But venture capitalists showed their range of interests this year, too, and 2015 B2B venture funding was largely about quality, not quantity. Here, we recap some of the most intriguing financing rounds for B2B innovators in the last 12 months, a list that includes a few yet-to-be household names the market will surely be watching next year.

Bringing Tech To Banks

It’s not a direct lender; instead, Mirador calls itself a Lending-as-a-Service provider, providing lenders with the technology they need to reach SME borrowers. The company revealed on Nov. 30 that it secured $7 million in Series A funding through a round spearheaded by Core Innovation Capital. Other backers included Nyca Partners, Jump Capital and repeat investors Collaborative Fund, Wicklow Capital and Crosslink Capital.

At the announcement, Core Innovation Managing Partner Kathleen Utecht highlighted Mirador’s competitive edge. “Banks enjoy important relationships with small business customers and are stable sources of lendable capital, but they frequently lack the tools to profitably offer small commercial loans,” she explained, adding that Mirador provides a more cost-efficient way to serve small business borrowers.

Mirador said it will use the funding to pursue more relationships with financial institutions.

Earning Big Name Attention

Only days ago, Salesforce revealed plans to acquire quote-to-cash B2B firm SteelBrick in a deal worth $360 million. That acquisition target enjoyed some VC attention this year, having raised $48 million in venture capital led by Institutional Venture Partners last October.

It brought SteelBrick’s total funding war chest to about $78 million over the space of 18 months.

“SteelBrick is about helping our customers grow revenue more quickly and more profitably. With our newly expanded Quote-to-Cash suite, we make closing deals as easy as possible for sales teams, while we help our customers quickly recognize revenue and collect cash,” SteelBrick CEO Godard Abel said. “We’re thrilled to now have the capital and support from world class technology investors to build the company of our dreams.”

Emerging Alt-Lenders

The market may be saturated with alternative lenders, depending on who you ask. So, it’s worth it to keep an eye on the players that secure financing from venture capitalists to pull ahead of the competition.

One company to do so was Jimubox, based in China, with $84 million raised in April. The Series C backing was led by U.K.-based Investec Bank, which sees Jimubox as China’s next P2P finance leader, and signals a new boost of confidence for China’s alt-lending market that has so far been focused on Alibaba’s work in the space.

Another was Bizfi, which nabbed $65 million from Metropolitan Equity Partners, with a focus on providing working capital to small businesses.

In a recent interview with PYMNTS, Bizfi Founder Stephen Sheinbaum said that financing through the interconnected platform offered by his company especially helps supply chain management in industries such as food and hospitality and also helps franchise companies, such as Subway, wherein, in one example, a franchisee may opt to take on additional units but has a short turnaround in which to raise cash — a small window served well by quick loan approval and cash that can be at the ready in two to three days.

The $65 million just raised will help Bizfi boost its technology platform, chiefly through increased hiring of data scientists, Sheinbaum added.

B2B’s Uberization

The trend of “Uber of X” continues as startups emerge that take the Uber on-demand business model and apply it to new services. B2B players started jumping on this train this year, too, with on-demand apps geared towards businesses and their owners.

One was Shiftgig, which secured Series B financing to the tune of $22 million, led by several backers, including Renren Inc., Chicago Ventures, DRW Venture Capital and GGV Capital.

According to GGV Capital Managing Partner Jeff Richards, Shiftgig provides businesses with the much-needed service of finding hourly workers — not salaried — a need that has grown since the introduction of the Affordable Care Act, he said, adding that hourly employees are searching for more work, too.

“Hourly workers, since Obamacare, have been facing the reality that employers want to keep them to 29 hours a week, so they don’t have to pay health care,” he said in a statement. “They’re looking for new shifts to fill their income gaps.”

Logistics Innovation

Logistics service providers secured significant VC attention this year, especially in India. But a new venture capital trend could be emerging into 2016 as startups begin to look at logistics in a new light, largely inspired by the sharing economy.

Flexe, for instance, announced a $4.4 million investment round led by Fritz Lanman, Second Avenue Partners, Hank Vigil and SV Angel. The firm launched as a way for companies with extra, unused warehouse space to rent it out to other businesses in need. Businesses can sign up for Flexe for free to list their unused storage capacity, and companies that need more storage can find a listing that meets their criteria.

Just weeks later, Australian startup Spacer announced its own funding for a similar prospect. The company said it secured $1 million from angel and private investors for its services, which provides an online marketplace for companies to sell and buy open storage space. Spacer CEO and Cofounder Michael Rosenbaum said in a statement: “Space is the new tradable commodity in the sharing economy, which is not surprising given the high density living in Australia’s capital cities, which has resulted in some people having space and many others needing additional space.”

 

This list is far from exhaustive. From Software-as-a-Service, to Big Data analytics, to enterprise mobility and B2B eCommerce, venture capitalists focusing on the B2B startup community provided funds across the spectrum of enterprise-serving sectors. It may not be the most lucrative of VC segments, but B2B is diversifying, innovating and getting the financing to help it along the way.

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