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When starting a business, having investors is vital. Without this funding, starting this new journey would almost be impossible. However, it’s important to understand the different types of investors out there.
One common type is a B2B investor. Also referred to as a business-to-business investor, these entities supply funding for other businesses. These entities can be an individual or an organization. This is a great way for B2C startups to get started in their business and find the capital they need to advance in the industry.
Angel vs. Venture Capital Investors
While there are many different types of investments out there, there are also different types of B2B investors. Two of the most popular types are angel investors and venture capital investors.
Although both of these groups can be called startup investors, there are some key differences to consider. A venture capital investor is an entity that invests in small companies, like startups, and they gain their capital from a pool of investment organizations, large companies, or pension funds. A key point to remember is that these people typically don’t use their own money for these investments.
On the other hand, an angel investor is someone who does use their own money to fund investments. SaaS investors are one of the more popular groups of angel investors today. Many of these individuals have a net worth of at least $1 million and make annual incomes above $200,000. This makes them an accredited investor, which is necessary to have the title of an angel investor. While these investors can be anyone, they are typically the friends and family members of a small business. Need help on how to find angel investors? There are tons of resources online, so be sure to do your research.
Investing in these small businesses is sometimes called seed funding for startups. Seed funding works by investors funding a business in exchange for equity in the company or a share of profits. The majority of seed funding today comes from the families and friends of the founders of these companies.
B2B Venture Capital
Startups have many different avenues to raise money, but seeking B2B venture capital is a very common approach. This capital refers to money given to startups from investors that believe the company has a high potential for growth. Now that you understand the B2B venture meaning, let’s now dive into some of the top seed VC firms in the world.
Key Players in the B2B Venture Capital Space
While there are tons of different B2B venture capital firms out there, a few of them are making a big splash in the industry. Check out more information about these firms below:
Sequoia Capital has provided funding to many early and late-stage startups. Known as one of the top 25 VC firms, Sequoia Capital was founded decades ago in 1972. Since their formation, the investment group has partnered with DropBox, Google, Yahoo, WhatsApp, and many other companies.
Costanoa Ventures is a venture capital company located in Palo Alto, California. The organization focuses on Seed and Series A investments. They primarily work with the following industries:
- Modern SaaS
- Data/ML Infrastructure
Costanoa Ventures is known for having a hands-on process from some of the most skilled professionals in the venture capital space.
Angel Investors vs Venture Capitalists
While we talked about venture capital firms above, they differ from angel investors. While venture capitalists invest in small businesses by using money from investment companies and large corporations, angel investors are accredited investors who use their own money to fund their investments.
If you’re familiar with investors, you’ve probably heard of angel investors. However, they aren’t like the average investors today. To help clarify, we’ll compare and contrast angel investors and venture capital investors.
What is an Angel Investor?
An angel investor is a person or organization that provides funding for companies they believe in. These are accredited investors who use their own money to offer funding for startups or other small businesses. However, certain requirements are needed for angel investors. For one, you need a net worth of at least $1 million. Secondly, you must make an annual salary of at least $200,000. If you satisfy these two requirements, you’re eligible to become an accredited investor.
Venture Capitalist vs Angel Investor
Many people believe these two groups are one of the same, but there are a few differences to consider.
For starters, both of these investment groups provide funding for businesses. Both of these groups take risks in hopes of seeing a solid return on investment. But one of the main differences is that venture capitalists tend to provide much higher funding amounts compared to SaaS angel investors.
Another key distinction to make involves the type of money used for investing. For venture capitalists, they use money pooled from investment companies, large corporations, and pension funds. B2B angel investors, on the other hand, use their own money to fund their investments.
Where to Find Angel Investors
Angel investors for startups can be found in a wide variety of places. And with the many different types of angel investors available today, there are many avenues to take. For starters, try looking into an angel investment network online. There are tons of sites that can show you a massive Angel investors list. Depending on the site you choose, you can send investors a message to get in touch.
B2B Software Investing
While investors may give money to any type of small business or startup, software and SaaS companies are extremely popular in this day and age. We’ll now dive into more information about what SaaS even is, including some of the leading SaaS venture firms in the world today.
What is SaaS?
Software-as-a-Service or SaaS is a type of software that’s supplied on a subscription basis, opposed to a one-time subscription fee. This type of software is built externally in data centers and servers, rather than being housed internally. This business model provides lower startup costs, updated security, and the potential for SaaS VC funding via B2B software investing. Now that you understand more about SaaS, we’ll now list out some of the more popular software venture capital firms in the industry.
Leading Investors in SaaS Companies
There are a wide variety of SaaS seed funding investors that have been investing successfully for decades. Here are some of the more popular funding organizations:
Formerly known as Accel Partners, Accel is an American VC company that works with companies in the seed, early, and growth stages of formation. The company has offices in Palo Alto and San Fransisco, and they also have subsidiaries in India, London, and China.
Being known as one of the leading firms for SaaS ventures, Battery Ventures is an investment firm that operates worldwide. The company offers venture capital and equity investment solutions from its many offices, located in San Francisco, Silicon Valley, Boston, London, and Israel.
Emergence Capital is a capital firm that typically works with companies in the early and growth stages. The company usually provides funding for B2B software startups and enterprise cloud businesses.
Insight Venture Partners
Insight Venture Partners is a venture capital firm based out of New Your City. The team invests in growth-stage companies that are in the technology and software industries.
While you probably know what a startup is, are you familiar with the difference between B2B startups and a B2C startup? We’ll help answer that question below, and we’ll also talk about some of the biggest and fastest growing B2B startups in the industry:
B2B Startups Meaning
Sometimes referred to as enterprise startups, B2B startups are businesses that offer a product or service to another company. While other startups provide solutions to consumers, B2B startups work with other companies to solve their needs.
A startup that provides products or services to consumers is known as a B2C startup. One of the most notable examples of a B2C company is Disney. On the other hand, Apple is known for being both a B2B and a B2C business.
Top B2B Startups
The world is full of a large number of B2B startups doing pretty incredible things. Many startups are growing substantially while receiving the capital they need to make their dreams come true. Take a look at some of the most successful B2B startups in the world today:
As more and more companies are working remotely, they need the best telecommuting tools to keep up with the demand. That’s where Slack comes in. Being a world leader in collaboration and team working software, everyone loves the platform. It’s also very responsive and user-friendly, so we expect this startup to grow to new heights in the coming years.
Snowflake Computing is a data warehousing software that works on the cloud. The company’s main goal is to allow businesses to store and analyze their data in a more efficient and effective way. Snowflake made the list for the best B2B startups 2020, and we expect this business to excel even higher over the next few years.