B2C Startups are Unicorns? : Founder’s Strategic approach to End Users

Does it matter whether you start a B2B Startup or B2C Startup, and is there any particular advantage you already have about being a particular one?Well, Majority of First time founders start B2C companies and Second time founders start B2B companies.

Like PepperTap — a B2C company, shut down its operations and 3 years after, its cofounder began to work on a B2B marketplace for small retailers named GramFactory.

However, as an exception, Kunal Shah, started B2B startup first and later came for B2C (CRED)

At Markoknow , when we come across founders, we have seen Founders with good industry connects preferring to enter and leverage this network while founders with lesser industry connects focus more on providing value directly to consumers.

More of like a Debt Structuring Startup would be started by an Ex Banker due to better validation (in a B2B setup) while an app to track expenses for users by someone who has faced similar issues and understands the problem first hand (in a B2C market).

Can we understand both better?

To begin with a comparison of the two, here is a simple way to understand them from the picture.

As a Founder, which one you should choose?

While this might be, B2C startups have historically dominated the list of most valuable startups globally, primarily due to their potential for large-scale consumer adoption and market size. Companies like Uber, Airbnb etc have achieved multi-billion-dollar valuations. But the cash burn it takes to capture this market is really high.

For B2B, the rise of cloud computing, software-as-a-service (SaaS) models and now Artificial Intelligence are the prime driving force for B2B Startups. B2B are also popular for bootstrapping because of its service nature and quick return in cash.

If a founder takes one route, can they switch to the other?

Founders are fond of Pivots. Well this one is a structural pivot. Surely, we cannot exactly claim whether you can switch or not, but here are some popular startups that did pivot

• B2C → B2B : UrbanClap was initially launched in 2014 as a B2C marketplace for local services, providing a platform for users to connect with service professionals for various home services. In 2019, UrbanClap rebranded itself as Urban Company and made a strategic shift to a B2B model, offering the service offering professionals a platform to streamline their operations, access a larger customer pool, and benefit from Urban Company’s brand and marketing reach.
• B2B → B2C : OYO Rooms was founded in 2013 as a B2B platform, primarily targeting budget hotels and providing them with technology-enabled solutions to improve their operations and increase occupancy rates. However, OYO Rooms recognized the potential in serving individual consumers directly and decided to shift its focus to the B2C market.

Can a startup offer services to both, Business and Consumers?

Serving both business and consumers would mean high operations, but Yes! You can offer services to both the segments if you can handle efficiently the operations and here is an example :

• BigBasket is an online grocery delivery platform that offers a wide range of groceries and household products. As a B2C company, BigBasket allows individual consumers to browse and purchase groceries through their website or mobile app. BigBasket also operates in the B2B space, catering to businesses and institutions such as hotels, restaurants, and offices.

Conclusion: The time at which a startup founder enters into solving a problem, is quite early to know the pros and cons of that particular industry and idea performance for deciding B2B or B2C aspects. To think more clearly, at those levels, the strength that the founder has in terms of network, fund, plans, past experience plays a bigger role than the industry figures. As a matter of fact, shifting to adapt later is more suitable than trying a tougher structure to crack early on. So the Founder should rather make the decision based on their guts than popular opinion at least in early days. And we have seen some founder gut disrupting industry figures. So in Early Days of selecting the entry to your segment,

Founder Guts > Popular Industry Figures (Obviously!)