Day: 19 December 2023

The Battle of B2B and B2C Startups

Figuring out what potential investors are looking for from startups in emerging markets such as Alberta can be worlds apart from what they’re expecting in more established hotspots such as Silicon Valley, Stockholm or even Toronto.

For example, In July Silicon Valley-based software company Teknol announced plans to move its engineering headquarters to YYC, a $12.5-million investment which is predicted to create 125 jobs over the next three years, with the company’s CEO hailing Cowtown for the “positive buzz” of its tech sector.

This year’s annual Tech Talent report also found Calgary to be Canada’s second largest tech hub (trailing behind Vancouver) with job growth in the sector increasing by a massive 61 per-cent.

Most companies, however, can be separated into two different groups with unique factors driving their investability from a VC perspective: 

Business to Business (B2B)

B2B simply means the business will focus on selling its product, service, or technology to other businesses. A company dedicating itself to this strategy needs to make sure potential investors understand why they have chosen to target other businesses (as compared to individual consumers) and the benefits of doing so.

A B2B sales strategy allows for larger purchase orders or broad installations of technology, as other businesses usually have significant buying power (much more than the average consumer), as well as a willingness to sign long-term contracts.

When preparing to pitch a B2B business to potential investors, founders should make sure to highlight the advantages of targeting other businesses and clearly explain why this is the strategy that provides the largest avenue for further growth for their company.

Business to Consumer (B2C)

Where B2B’s target other businesses, B2C’s target the retail consumer. By going direct to consumer, companies are targeting an audience with much lower buying power when compared to other businesses. However, the size of the potential market is usually much larger.

Typically, B2C businesses benefit from higher gross margins, as well as a much wider reach in terms of who they can market their product/technology to.

As an entrepreneur begins to think about presenting their B2C business to venture capitalists they should remember to articulate the breadth of the market, high margins and (again) why specifically this is the best decision for their company.

Testimonial: A Lift for Arolytics

In September 2023, Arolytics Ltd – a provider of methane software and data analytics solutions for the oil and gas sector – became the inaugural investment in BDC Capital’s new $150M Sustainability Venture Fund.

The fund itself is dedicated to investing in businesses which develop technology that furthers the field in meeting sustainability and climate targets. 

While additional investors include Yaletown Partners, StartupTNT, and a Houston-based strategic investor, it was co-founder Liz O’Connell’s work with Metiquity Ventures which she credits to helping leverage the company’s seed round experiences.

Metiquity Ventures was one of the first investors to partner with Arolytics Ltd. And Liz says their startup journey was in a much better position to raise greater investment because of their lead infuse of cash and contribution (for example, Bryan Slauko sits on the Arolytics Board).

“Metiquity has been there through all of these crazy ups and downs, and all these things that get thrown at us as a result of running a startup,” says Liz. “These issues include a new range of data challenges at the hand of an evolving emissions measurement infrastructure, many of which pertain to the (very significant) monitoring, measuring and quantifying of emissions data across hundreds and thousands of individual facilities across dozens of different states and provinces and countries.”

Liz met her two fellow co-founders during an academic emissions research group, during a time in which there were little-to-no strong widespread regulations around emissions management for the oil and gas sector. However, with a prompt wave of new regulations came an opportunity for Liz and her co-founders to create digital solutions to support and automate new processes.

On the influence of lead investor Metiquity Ventures, Liz elaborated: “There’s always that ear to run something by – a second piece of advice. Jacques and Bryan are extremely responsive and they always bring a unique perspective to the table.”

“Leading up to our seed round that we kicked off earlier this year. Bryan (Slauko) had great recommendations on what type of investor we should consider and why. Their lead investment contribution of not only time but experience has helped us move to further seed rounds.” 

Bryan Slauko continues to sit on the software development company’s board of directors.

 

Testimonial: When WaitWell Got Tired of Waiting

In July this year, queue management software WaitWell – a queue management software optimizes service delivery at busy locations like universities, government offices and clinics – secured $1.5 million CAD in seed funding to expand its product offering across the States, venturing into new markets along the way. However, without the “sounding board” of Bryan Slauko and Jacques LaPointe the WaitWell story would have been very different indeed.

Before the coronavirus pandemic, WaitWell’s founders – husband and wife Steve and Shannon Vander Meulen – ran a motor vehicle registry office in Alberta, but with the ‘unprecedented new normal’ of Covid-19 came a cavalcade of service problems for customers and companies alike.

When the Vander Meulens noticed an opportunity to better resolve lineup management issues, they decided to launch beta testing on WaitWell in August 2020. 

“Through the pandemic, we knew that we had the important role of providing an essential service while doing so in a safe and effective manner,” Steve began. “The solutions that were out there weren’t exactly fit for the style of business that we ran, so we built our own and had the good fortune to commercialise that to neighbouring markets.”

On the topic, Shannon said: “Immediately we realised once you digitize the way that people enter a queue, you have an opportunity to really digitally transform the entire customer experience from the time they join the queue until after they’ve left the building.”

The pair met Bryan and Jacques at an investment summit hosted by Startup TNT (WaitWell won the investment, by the way) and were struck by the pair’s unparalleled experience in the startup world, as well as their shared determination for the company to exit within Steve’s intention of a seven-to-ten-year timeframe.

It’s this “emotional investment” in the WaitWell journey that Shannon credits to the company’s success to date, crediting the pair as a “sounding board” for their questions and concerns as they worked to build WaitWell as a leader in queue management software.

“Although we’re experienced entrepreneurs, we are not experienced in the startup world, and so a lot of times we run into hurdles, challenges and questions,” Shannon said. “Bryan and Jacques have also been really helpful in providing connections for us. They’ve done a lot of introductions where necessary.”

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