B2B start-ups gather momentum

Until two years ago, start-up advisors, indeed many angel investors, had a word of caution for fresh entrepreneurs eyeing the consumer Internet market. “Don’t show a B2B revenue plan in the investor deck,” they often said. “The valuation is zero.”

Times have changed. Nearly 50 per cent of the 1000 start-ups India added in 2017 were in the B2B segment, up from 34 per cent last year, a new NASSCOM-Zinnov report on the ‘Indian Start-up Ecosystem – Traversing the maturity cycle’, found. The average funding for B2B start-ups in 2017 saw an increase of 5 per cent, while B2C average funding saw a decline of 10 per cent.

The report buttresses the fact that the world of venture investing in India has gone from irrational exuberance in the consumer Internet industry to a sense of normalcy.  For example, in 2015, many food-tech companies got funded by some form of institutional investment. That is unlikely this year, or even in 2018. At a seed level, investors are looking at fairly differentiated and defendable Intellectual Property (IP)-driven play. Which is why B2B is in fashion – the NASSCOM-Zinnov report says that “growth of B2B start-ups are being driven by Fin-tech, Health-tech, and B2B enterprise products and the rising focus on advanced technologies such as Analytics, AI, IoT, AR/VR, Blockchain, among others”.

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