If you are a startup eyeing the business-to-business software sector, it might be a good time to jump in.
We spoke with a handful of investors to get some insight into this space: Tomy Han, a principal at Volition Capital; David Blumberg, founder and managing partner of Blumberg Capital; and Richard Wong, general partner at Accel.
From their point of view, the hottest sectors within the B2B software industry look like:
- Security: For everyone on a cellphone or laptop;
- Supply chain visibility: How people buy has shifted to online;
- Health care: Especially telemedicine, with attention on COVID-19, but also helping the population get ongoing care and bridging that gap; and
- Collaboration and virtual workforce: Connecting everyone who is working remotely
“The virtual environment has created an interesting scenario,” Han of Volition Capital told Crunchbase News. “Mid-market enterprises and big companies are trying to be more productive, and that move has roared into a virtual workforce.”
It used to be that Silicon Valley was the only place for an entrepreneur to start a business easily, but now it can be done anywhere in the world—hire virtually, collaborate and sell virtually, he said. In the meantime, startup costs are also decreasing as is the ability to develop cloud-based products
There are two types of potential business ideas that play into the current environment according to Han. Namely, how to help existing customers operate better and how to deliver services to customers. One way to decipher if a product or service is relevant is to seek out beta testers. It’s also a great way to get new customers.
“I’m not sure people want strangers coming into their house, so you have to look at how we digitize it,” Han said. “Now is the time to do that.”
One trend within the B2B software space is integrating functionalities, thus appealing to enterprises that only have to buy one subscription versus five, he said. That is an area that will take a while to see the effects, but Han thinks it will be a benefit to train on only one platform.
Another trend is creating the “next-level” versions of tools, taking into account the workflow issues of the customers a startup is trying to fix. For example, in the supply chain vertical, many companies are still using spreadsheets to keep track of their workflow approvals and billing.
“This solves workflow problems that could be a win,” Han said. “Necessity is the mother of all invention, so five or 10 years down the road we will see a lot of opportunities for entrepreneurs to tackle what came sooner, so it is a good time to start a company.”