B2B venture capitalists are putting their money where the trends are. Some of this week’s biggest funding headlines highlight the significant investment in B2B companies focusing on emerging markets and innovation: digital payments, e-commerce, and big data, three tools emerging on the B2B scene as crucial technologies for the coming years.
Digital Payments
The percentage has fallen over the past few years, but most U.S. businesses still pay at least half of their bills by check. Resources aimed at reducing the time and paperwork of B2B payments have emerged to help business move away from the paper check and into digital payments, where the demand for such a service has compounded.
Over the past year, Bill.com has built a network of more than 600,000 members using its Internet-based suite. Closing a $50 million round of financing this week, founder and CEO René Lacerte said the company plans to use the funds to develop their core technology. Instead of handling printed invoices, clients send documents to the cloud-based platform—by email, fax or uploading— Bill.com routes the electronic files for the needed approvals, and at the final stage the software will submit electronic payment or, if desired, send a paper check. Bill.com banking partner Silicon Valley Bank and existing investors including DCM Ventures, August Capital, Napier Park Global Capital and Commerce Ventures provided the most recent round of funding.
Businesses are increasingly shifting away from catalogs and call centers, and moving research and purchasing capabilities online, thanks to increasing demand by buyers to shop online like they do at Amazon and eBay.
E-commerce platforms specifically for businesses come with a unique set of challenges. Unlike consumer-focused e-commerce, fluctuating pricing, large volumes and logistics are all concerns. Insite Software, which recently announced $15 million in funding, wants to help business capitalize on the growing e-commerce trend.
The new funding comes on the heels of announcing Tony Abena as CEO. Abena, who was previously the chief operating officer at Deloitte Investments, said he plans to use the investment to expand the B2B ecommerce market; he told TechdotMN, “there’s a mythology about e-commerce that’s it’s all retail focused, but what we have is B2B in manufacturing and distributing. We think that between 3-7 percent of this market is currently up and running online, so there’s a tremendous opportunity at hand.”
B2B e-commerce is on-par to generate $12 trillion in sales globally by 2020. In the next five years, the B2B e-commerce market will be worth two times the B2C market, if projections hold, research says.
Businesses are purchasing online more frequently, too, with 68 percent of B2B buyers purchasing goods online – up 19 percent since 2013, according to the Acquity Group. So why not buy a more beautiful workspace? West Hollywood, California-based Laurel & Wolf provides an end-to-end Internet-based portal to connect businesses with interior design service, from figuring out each company’s “look” to paying for their designer’s service all with the Laurel & Wolf ecosystem. The idea was born out of co-founder Leura Fine’s own frustrations with trying to connect designers with the business that needed their services. A $4.4 million round of Series A funding announced Friday, February 13, contributed by Charles River Ventures, Karlin Ventures, Upside Partnership and Draper & Associates shows faith that B2B e-commerce can fulfill wants and needs stylishly.
Not just limited to the United States, Delhi, India-based Snapdeal made headlines this week. If its bid to raise $400 million is successful, it will be one of the largest fundraising rounds ever by an Indian e-commerce firm. The country is a hot one for B2B e-commerce with Amazon, eBay and Chinese powerhouse Alibaba all fighting for market share in the space.
Second to business-focused e-commerce, big data is another emerging area for innovation and influence. The numbers show B2B purchasers want to buy online, and the next logical step is finding them. 6Sense founder Amanda Kahlow believes her team has found the formula, and a set of funders led by Bain capital have put their faith in her with $20 million in Series B funding announced Thursday, bringing the total to $36 million raised since the company’s founding in 2013. 6Sense uses a blend of time-based activity, static and external data to better predict which prospects will buy and better match companies with prospects.
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