Thoughts on B2B2C Models

B2B SaaS is in right now.

Subscription-based business services have remained attractive to investors for the past decade, and companies such as Salesforce, Twilio, and The Trade Desk are just some of top performers that have paved the way. These models were quickly able to locate a market, identify product/market fit, and then capitalize through recurring monthly or annual revenue. These last two pieces are critical as to why these models remain hot in the eyes of investors.

We have seen hundreds if not thousands of consumer-facing apps just in the fintech space. It has become somewhat of a joke within VC circles whenever they hear about a “new” financial management app.

Not only is this market oversaturated, but it is also extremely difficult to differentiate and even more difficult to get enough users on your platform to reach critical mass. As such, founders have begun to pivot towards B2B2C platforms to “de-risk” themselves. However, by doing so, they may make themselves even more inherently risky.

Direct-to-consumer products must only please the user. This is by no means an easy task, but if your product addresses a real problem, then it adds value to the end user.

Products that leverage B2B partnerships to then go to the consumer must please both the partnering business and the end user.

In order for this to work, B2B2C products have to have a flawless, built out back end that abides to all partner compliance laws while also having a seamless front end that attracts consumers to the platform and then retains them. This seems much easier said than done, and the lack of notable exits using this model support that.