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#003 Why we care about B2B?

Wed, 07 Aug 2019 04:30:23 GMT

We are B2B investors. The more we look opportunities the more we are convinced about backing B2B and B2B2C opportunities in comparison to B2C. Here are some thoughts on why:

B2B / B2B2C Models: We are positioned well for such investments

Sophistication of problem - not run of the mill / pedestrian in nature; sure feels more meaningful to engage with
Visible impact - paying customers / repeat customers who are actually seeing the value of the solution / product
Experienced / profound founders - not college kids; have typically spent double-digit years in their industry / domain; there is always a lot to learn from them
Meaningfully scalable - sustainable models that need to be scaled; requires minimum capital and a path to unit economics is fairly visible
Relatable - given our past experience - the entire team comes with a B2B investing back-ground - guess we are in comfort zone when it comes to investing in such opportunities; which also ensures that our value-addition is far more visible
Exitable - from Day-1 one is able to predict / target a potential exit; it’s our job to orchestrate it at the right time to ensure the right multiples are generated

B2C: Harder for a mid-sized fund like ours!

Easier to understand - therefore doesn’t feel challenging or sophisticated
Impact is typically small - therefore you require millions of customers to scale
Founders don’t need to be from the domain - just smart folks who have identified the problem and the solution better than anybody else
Requires significant capital to stay afloat as a business; customer acquisition costs and then customer retention costs could get prohibitive
May be even more relatable than B2B, of course all of us are users / consumers; but surely can’t engage beyond that - it’s a lot of shooting in the dark and building several unique hacks to scale such businesses
Exits are harder - the ‘Flipkart event’ will not happen often and can’t be orchestrated easily. A buyer is paying for customer acquisition rather than IP and several times build may out-wit buy!

- Abhishek

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