Startups Venture Capital

Enterprise – The New Frontier for Startups

This piece from the NYTimes highlights that B2B (or B2B2C) can be sexy again. Consumerization in this space recently led by Slack, Zoom and Affirm, among others, has shown that there is an increased interest in the sector both from investors and enterprises/end users.

Large venture firms continue to gravitate towards the enterprise sector as the consumer world gets more difficult to navigate given the powerful moats of Google/Facebook and the like. It is becoming more challenging than ever to try to go head-to-head with the large tech players as they’ve got a strong beachhead in their respective industries.

The amount of money it takes to scale a consumer business now is enormous. Customer acquisition costs remain high, LTV is harder to predict and it’s a race to the bottom on media spending in a biddable world where you’re competing against numerous other companies with deep coffers (or freshly raised capital). We’re also seeing a reckoning where some companies in this space (especially DNVB – Digitally native vertical brands) are no longer being valued as tech companies by the street. This is something enterprise startups can avoid.

Hopefully public policy tightens here against the tech conglomerates, but some are hedging their bets that the enterprise sector may be safer in the interim. 

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