B2B Payments

Venture Capitalists Are Gearing Up For B2B Action

Will India ever see an end to its hot streak? The nation saw several investments in the B2B startup space, and in an interesting divergence from last year, venture capitalists seem to have moved on from their logistics obsession.

Instead, business services, B2B eCommerce and small business financing took home new funding this week (although investors remained mum on how much they provided).

B2B startups in the U.K. and U.S. also saw some action, from data management and security to Software-as-a-Service.

From what we know, less than $22 million was invested in the space. But with big-ticket financing headed our way in the next few months and with the closure of new venture capital funds this week, we’re sure the B2B venture capital space won’t stay quiet for long. Take a look at our recap of the investments that did take place below.



India’s B2B tech scene is on a hot streak, with the nation’s BHIVE, an on-demand workspace startup, securing angel funding, according to reports last weekend. A slew of venture capitalists provided an undisclosed sum to the company, which provides workspace and offices to startups and small businesses across a range of verticals. With plans to open its fourth workspace location in India, BHIVE wants to help other companies not only find a location to operate but to facilitate the maintenance, bill payment and other housekeeping needs of those businesses associated with finding a space.



That streak continued with Moglix, a B2B online procurement and eCommerce platform, nabbing funding from leading industrialist Ratan Tata. The mogul did not disclose how much he provided to the company, which was founded last year by a former Google executive. But the company is already inching towards global expansion, having connections with manufacturers across China and other parts of Asia. The backing from Tata follows earlier, pre-Series A funding provided by Accel Partners and Jungle Partners, as Moglix seeks to boost spending on marketing and grow its supplier base, according to reports on Monday (Feb. 8).


Digital Shadows

Over in the U.K., B2B Software-as-a-Service company Digital Shadows announced Tuesday (Feb. 9) that it secured $14 million in funding. The Series B backing was led by Trinity Ventures, along with existing supporters Storm Ventures, TenEleven Ventures and Passion Capital, reports said.

Digital Shadows provides security solutions to enterprises, mainly through its flagship offering, SearchLight. The tool uses real-time scanning to prevent potential compromises of sensitive data. The $14 million raised will be used across the company, Digital Shadows said, as it looks to provide businesses with “cyber situational awareness.”



Also on Tuesday, CognitiveLogic revealed a $3 million funding round to help grow its own data-focused services. The company, which saw support from Upfront Ventures and IA Ventures, is only about a month old, but with fresh investment, the firm plans to kickstart its B2B service of taking a collaborative approach to data analytics.

According to reports, CognitiveLogic joins up data from multiple enterprises so clients can gain insight from that information but protects the data between businesses so raw data is not actually compromised. The startup’s founder, Nick Halstead, who also founded DataSift, told reporters the solution aims to provide businesses a secure and robust way to conduct research.



Yet another SaaS firm secured fresh funding on Tuesday, with California-based Aplos nabbing $4 million from San Joaquin Capital. The Series A backing will go to the software firm that provides cloud-based accounting tools specific to the nonprofit sector.

According to reports, more than 20,000 businesses use its software as of 2015, and it holds the title of the first SaaS startup serving the not-for-profit sector with accounting tools to not originate from Silicon Valley. Aplos notes that traditional enterprise accounting solutions, like QuickBooks, can’t flex to meet the specific needs of the nonprofit sector, while other industry-specific solutions are often geared towards large nonprofit corporations, leaving a gap for smaller, not-for-profit businesses.



India isn’t done yet with its B2B investments. On Wednesday (Jan. 10), alternative lending platform Capzest, run by Wiseworks Technology, secured $200,000 from Lion Ventures to expand its small business financing tool.

In addition to Lion Ventures, investors included Coverfox CEO Varun Dua and other moguls, according to reports. Capzest said it plans to use the financing to strengthen its underlying technology. The company links with financial institutions to connect SMEs to loans, and with the latest backing, the firm will look to introduce additional financing products, including commercial loans.


Honorable Mentions


India’s B2B venture capital streak is likely to continue this year. The nation’s Paytm is reportedly looking to raise $400 million by the middle of 2016 in an effort to launch its new payments business, Paytm Payment Bank. The mobile payment processing company saw high-profile support from Alibaba last year, and while it serves consumers, Paytm has recently been stepping into the enterprise finance world.

Last year, the company teamed with Aditya Birla Finance to connect SMEs in India with financing products. With sources anticipating Paytm’s new funding round, some analysts believe the company could be headed for a merger with Indian eCommerce firm Flipkart, which also provides B2B procurement services. The company already has a banking license from federal officials, reports noted.



Venture capitalists rarely place their money in B2B payments-specific startups, but that doesn’t mean investment in the space is nonexistent. Payment Data Systems subsidiary FiCentive hooked up B2B payments firm C2Go with a $200,000 loan, reports said this week.

C2Go specializes in providing electronic and mobile payment solutions for businesses that need to handle cash transactions like commission fees, reports noted. Its strongest market today is Las Vegas and its restaurants and nightclubs. The new capital will be used to help expand the company; Payment Data Systems-owned Akimbo will now provide a platform for C2Go’s operations, and reports added that both will also now be able to provide MasterCard prepaid debit solutions.


Incoming Investments


A new U.S. fund has closed, reports said Tuesday. MissonOG closed its $35 million fund, which will target its support for B2B-focused technology firms, the company said.

Enterprise financing company FactorTrust is just one of the businesses already under the MissonOG portfolio; the company said it would continue to eye B2B payments, financial services and software startups for its next funding ventures.



BBVA is closing its $100 million in-house venture fund, but that doesn’t mean the firm is done investing. The company announced Thursday (Feb. 11) that it will be launching a new, independent fund, Propel Venture Partners, and, in doing so, will invest $250 million to kick it off.

Propel will focus its investments in FinTech firms, according to reports, and that is likely to see some business-servicing startups in the mix. BBVA had already invested in SME financing platforms Taulia and Prosper; reports said Propel will be eyeing startups in the payments, eCommerce and wealth management spaces, among others.


With so many investors staying quiet on how much money they provided, we can only know for sure that just over $21 million was provided to B2B startups this past week — hardly a record-setting figure. But the closure of new funds, coupled with rumored incoming investments, suggests that this is only a brief hiatus in high-value B2B venture capital.


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