Something kind of funny is happening right now. Many of the early stage investors that used to do a lot of raw consumer deals are saying “man, consumer is hard! It’s hard to pick winners. I’m going to focus on B2B”
Consumerization of business software is a “hot” meme. We are believers in some version of it – we are investors in 5 companies in this category with more on the way. But I think it’s funny to see folks flocking away from consumer.
Whereas B2B might yield a more predictable customer and real revenue from the beginning, scaling a company selling to businesses happens more slowly. It’s not viral. You also need to build a more robust product because businesses don’t really tolerate the same kind of testing and iteration as consumers. No B2B service has a Draw Something moment.
The main reason I think this is happening is that the “Series A Crunch” that was predicted happened. A lot of consumer, seed stage companies hit a wall the last two quarters. Seed investors are hurting, and they are shifting to B2B.
Hmmm, I think some version of this happened in the last bubble too. It’s kind of predictable.
The reality is that consumer and B2B are different, and each have their own benefits and drawbacks. I think both areas are promising, and whenever I see the flock move aggressively one way or the other, it pleases me to no end.
Our portfolio is roughly 60% consumer facing, and 40% non consumer facing. That balance is pretty much what we want to maintain going forward. We are open for business for consumer services. And we even invest pre-product, which seems like anathema to most investors.
So, consumer or not, if you are working on something you think is insanely great, reach out and say hi!