Chennai: After B2C startups, the B2B space is seeing heightened activity. Increased availability of funds has helped the emergence of several new B2B startups, the number of which has grown four times in the past four years. The investments in the space also have shot up multi-fold.
Between 2014 and 2018, the number of B2B startups went up from 800 to 3200. These new startups also managed to attract $3.7 billion venture capital investments. They had received a paltry $797 million in 2014, finds a report by Netapp and global management consulting firm Zinnov.
The growth is led by tech startups, which has been seeing a rapid rise in verticals like healthtech, fintech, and ecommerce/ aggregators. Online B2B has been attracting investor interest in the past few years for its strong business model. "Unlike B2C e-commerce, which has been flourishing on marketing and discounting, online B2B has strong business model. Here discount is not the key element. Availability, variety and customer service are the three important parameters for online B2B business," said Dinesh Agarwal, Founder and CEO of Indiamart.
Though, unicorns in B2B may not emerge as many as in B2C, exits are likely to happen faster due to this sound business model. The internal rate of return is also more positive.
The Netapp-Zinnov report also found that the newer B2B startups are mostly centered around Bengaluru, Mumbai and Delhi-NCR. The concentration of this ecosystem can be attributed to the spurt in the need for digital transformation of enterprises, financial institutions and hospitals.
