Is product-led growth the next frontier in B2B fintech?

Jonas M. Wenke
Dec 15, 2020 · 9 min read
Photo by Tim Gouw on Unsplash

Have you ever spoken to a B2B fintech founder about their sales process?

If not, you are missing out. Enterprise sales in B2B fintech is a chamber of horrors with so many obstacles and surprises along the way that it would be almost funny if it were not so sad.

Business-to-business fintech is having a bit of a moment right now. After many quarters of investors doubling down on consumer models, Sifted recently concluded that “investors love B2B fintechs now”. And it’s true - this space is a honeypot of opportunities. Lots of exciting businesses are currently being built within payments, infrastructure, digital assets, vertical SaaS.

In my job as a VC I get to meet a lot of B2B fintech founders. I always enjoy their infectious energy when speaking about the pain points they are tackling, the nuances of their products and the gigantic market opportunities they see. But when the conversations turn to their go-to-market strategy, their energy level is usually much more muted.

Then I get to hear the horror stories. I hear of dozens of meetings held with numerous stakeholders, months wasted on internal feedback loops, stubborn IT departments and the hubris of CTOs who believe they can build anything better and cheaper themselves.

I always wonder if there is not a better - though not necessarily easier - way to do this. One solution lies in product-led growth, and that is what I am going to explore in this article.

What is product-led growth?

Simply put, product-led growth can be described as a bottom-up distribution strategy. Product-led teams focus on specific pain points of certain user groups, and build products to solve them. They have the end-user in mind, and sell their solutions to them directly rather than going for enterprise licenses awarded by centralized procurement teams. The best products, though, have the potential to create ACVs per organization comparable to enterprise licenses e.g. by cumulating adoption across teams, by upselling value-add features or charging for increasing API traffic.

One might fall into the trap of thinking that product-led growth is all about distribution. But quite the opposite is true. For this strategy to work, the whole organization needs to be aligned: engineering, product development, marketing, sales, strategy, and so on. It deeply affects how a company is set up.

In a way, product-led growth is the playbook established by SaaS startups serving SME clients, where ACVs are low and hence do not allow for an enterprise sales model. However, product-led growth companies like Slack, Zoom or Stripe— some of the fastest growing and most valuable companies out there — have shown the potential of this model even with large enterprise clients.

To make it less abstract, let us compare a typical sales motion with that of a product-led growth model.

In the traditional model, a B2B fintech would hire experienced (and expensive) senior sales people with good domain expertise and ideally a strong network in their industry. The sales process would then look something like this:

A simplified traditional enterprise sales process

Of course, this simplified overview does not do justice to the complexity and the nuances of the process. Any one of these steps can take weeks or even months to complete. I recently spoke to a founder who admitted that sometimes the proposal negotiation (step 6 above) can take eight to twelve months. In financial services, the whole sales process can easily take 18–24 months.

Now imagine you could skip these steps and go straight to the end-user of your product. You would focus your resources on building brand and product awareness, and entice end-users to try your product. In order to facilitate that, you would eliminate any friction from product discovery to trying it out. That usually means having a convenient sign-up and self-onboarding process coupled with a trial period, sandbox environment or freemium offer. Obviously, the product requires good documentation as well.

Ideally, if you have built a good product, users will stick with it and become paying clients. Depending on the product, some may have paid tiers that unlock value-added features, while others may monetize live API calls and transactions processed.

To be clear, most product-led growth companies will still hire a sales team at some point to double down on and monetize their user base, e.g. by selling enterprise licenses to organizations with a critical mass of existing users. The hiring of a sales team, though, will occur at a much later time than in sales-driven organizations. Where traditionally sales teams are hired early to drive home the first contracts (and hence generate the first users), product-led teams build user traction first and then layer on sales to drive monetization.

This is what the ideal product-led growth process looks like:

A simplified product-led growth sales process

You might rightfully ask if this approach will ever lead to meaningful ACVs. The simple answer is: Yes, and increasingly so!

Tail-winds to product-led growth

There are two trends in enterprise software procurement that prepare the ground for the increasing viability of product-led growth:

Taken from Blissfully 2020 SaaS Trends report

Firstly, there is a secular shift away from central to decentralized procurement. Gone are the days when a single procurement entity was expected to know and understand the specific software needs of every person in their company. Companies are increasingly giving their teams and employees more freedom to choose their own tools. This is leading to a massive increase in apps used per company (as shown above). Compared to the same report from 2019, these figures have grown by c. 50%.

Secondly, McKinsey identified changing patterns in B2B software procurement driven by COVID-19. Enterprise software buyers and sellers increasingly embrace the “new digital reality” of remote procurement. Buyers have become used to buying software without face-to-face meetings, with “digital self-serve” and “remote” now being the dominant form of interaction. Even more interesting is the chart on the right, which shows that buyers are increasingly willing to procure even very expensive software through remote and self-serve channels.

Taken from McKinsey report on changing patterns in B2B sales (Oct-20)

Procurement is increasingly decentralized and self-service is becoming an acceptable channel. Startups with the right product that fully embrace these trends will have a distinct advantage in the “new digital reality”. In other words, product-led startups will eat the sales-led companies’ lunch.

For readers wanting to learn more about product-led growth, I recommend the treasure chest of content provided by OpenView: they have great articles both on the concept itself and how specific companies have implemented product-led strategies. This article by Andreessen Horowitz is also worth reading.

Product-led growth in fintech

Interestingly enough, if you google “product-led growth” you will get over 80k results. By contrast, if you google “product-led growth + fintech”, you will literally reach the end of the internet; there are no results.

Why is product-led growth, despite its current popularity, so absent within fintech? Well, I have noticed a few good reasons.

  • An obvious one is that many B2B fintech solutions are not designed in a way that lend themselves to product-led growth. They are either deeply integrated into the infrastructure of their clients or do not solve the specific pain points of certain user groups. For example, our portfolio company OpenLegacy is helping banks modernize their legacy infrastructure. They have a very powerful platform, but which simply could not be adopted bottom-up.
  • Other startups target the ‘wrong’ clients. Many B2B fintechs aspire to sell innovative software to incumbent financial institutions. But these companies are slow adopters of new technology to begin with, and leave less room for decentralized software procurement due to the sensitive nature of their processes and data. That is why you see more banks using Microsoft Teams than Zoom or Slack.
  • Another reason is that many founders still struggle with the implications of a product-led growth strategy, even when their products lend themselves to it. Their teams are not set up accordingly, and they feel as if they are giving up control of the sales process. Many would rather spend twelve months working a large account to close a six-figure contract at once rather than having to acquire lots of smaller accounts organically. Some even misunderstand the strategy as one that “gives away the product for free”.

There are, however, pockets that lend themselves to product-led growth within B2B fintech, and are being pursued by startups. The landscape below provides an overview of businesses that show ‘symptoms’ of product-led growth. Not all of them (fully) embrace the strategy, but all of them (possibly even unwittingly) embrace tactics that enable quick and frictionless user adoption through sandbox environments, self-onboarding or free trial periods, which are key ingredients in product-led growth.

The landscape of fintech startups embracing product-led growth tactics (Dec-20)

Very few fintechs actively portray themselves as ‘product-led’, and hence the above landscape is still very thin. A few trends, however, are already apparent.

  1. Product-led fintechs primarily target developers. This is not surprising as the role of developers has become increasingly influential in recent years, with many key platform decisions now being made by them. Developers, however, are creators, and they prefer to test products themselves over having to deal with overzealous sales reps. Best to provide them with instant and frictionless access and a comprehensive API documentation. Let them try out the product, let them build a use case and experience first-hand how well it works.
  2. API-first companies embrace product-led growth. This makes sense and feeds back into the above point. Developers are the key adopters of APIs and as such are open to product-led growth strategies. We can see a concentration of API-driven companies within payments and open banking. But more and more financial services are being abstracted into APIs today, a trend that will only accelerate in the future.
  3. Some companies are applying product-led growth to target functional (i.e. non-developer) end-users. Of those that have adopted the strategy, there is a concentration around back-office functionalities like accounting, payroll, and expense management. An interesting outlier here is Pipe, which is a lending company adopting product-driven tactics.


Product-led growth is an exciting strategy for the right kind of fintech startup. When properly executed, this strategy can be a growth hack to solve the very tedious process of enterprise sales. There are also significant tail-winds like the proliferation of the API economy and changing patterns in procurement that will drive this strategy further into the mainstream.

Some companies already employ product-led growth tactics, but I am looking forward to more startups fully embracing this strategy to build large and fast-growing B2B fintech companies.

If you are a B2B fintech founder embracing product-led growth, we at CommerzVentures would be happy to hear from you. We are an independent venture capital fund with an exclusive focus on fintech. We are e.g. early investors in Marqeta, Mambu, and eToro_Official.


Early-stage VC fund focused on Fintech and Insurtech