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No going back: Investing in startups that are redefining the modern enterprise software stack

January 10, 2022

In 2022, we’ll be doubling down on companies that create the building blocks and infrastructure layers that will be critical foundational layers in Web 3.0 innovation. 

By Rashmi Gopinath, General Partner, B Capital Group

Enterprise technology is a vast and always-relevant category, but the pandemic has driven the sector into overdrive. Adopting cloud technology was necessary for companies to modernize before; now, it’s table stakes for supporting remote work. Software as a service (SaaS) has always given companies helpful flexibility; now, it’s a critical path to agility, which companies need to succeed in our current chaotic environment.

In 2021, businesses were quicker than ever to purchase SaaS productivity tools and cybersecurity software, in an effort to help their employees securely work from home. Among B Capital Group’s portfolio of enterprise startups, we saw buying cycles getting almost halved – from a normal six to twelve months down to three to six months.

Even as some businesses start returning staff to the office, remote work will remain entrenched, driving continued success for enterprise software tools. COVID-19 variants play a role in that, but so do employee preferences and a tight talent market. Bottom line: Distributed global teams are a necessity to access top employees. If you want to hire the best, you have to hire the best talent regardless of location.

Enterprise innovation wasn’t limited to productivity software in 2021. Cryptocurrency continued to gain mainstream appeal, while pandemic-related challenges such as supply chain disruption drove blockchain and artificial intelligence innovations. The acceleration of blockchain and digital asset adoption created greater demand for enterprise platforms that support digital asset trading, prevent crypto fraud, and enable blockchain application development.

In 2022, B Capital Group will be doubling down in areas where we’ve already seen promise. We’ll also continue supporting forward-looking enterprise software platforms that support emerging digital transformation use cases. Here’s what all this will look like.

Enterprise Software: Automation, productivity, and collaboration tools to make employees’ jobs easier

In 2021, companies of all sizes continued striving to adapt in a remote-first world – both when it comes to interacting with employees, and with meeting customer expectations. As a result, cloud infrastructure, SaaS applications, and AI/ML sectors flourished. B Capital Group made a slew of important bets on startups that focused on enabling the future of work for modern enterprises, including:

  • Clari: Clari uses AI and automation to provide companies with seamless access to revenue insights based on massive amounts of data from across their different company systems – including CRMs, marketing software, emails, and files. Clari’s efficiency streamlines workflow and makes the jobs of sales professionals more predictable and consistent.
  • Pendo: It can be hard to know how customers are experiencing your software when you can’t easily see or speak to them. Pendo offers a suite of tools for product teams and customer success/support teams by combining product usage analytics with user guidance, communication, feedback, and planning tools that enable companies to measure and elevate their customer experiences as well as drive higher net retention and revenue expansion opportunities.
  • Certn: With remote onboarding serving as the “new normal,” companies need tech-enabled background check solutions that they can trust, without having to burden potential hires. Certn’s AI-powered identity verification and global background checks leverages machine learning and automated data integrations to drastically improve employee onboarding and screening processes.
  • OwnBackup: With employees now working from home and handling critical company data from cloud-connected devices, companies need cloud-native modern backup and recovery capabilities they can trust. OwnBackup’s category-defining SaaS data management platform provides the most comprehensive data backup and protection solution for managing valuable enterprise data assets.
  • Phenom People: Phenom People is an AI-powered talent experience management (TXM) platform that offers an end-to-end solution for talent acquisition and management. Enterprises leverage the platform to build career websites with personalized job and content recommendations, chatbots to communicate and schedule potential hires, and a candidate relationship management (CRM) system for pushing relevant content to candidates.

In 2022, we’re interested in doubling down on “future of work” platforms that address talent shortage problems and leverage AI and automation to make employees more productive.

Similarly, we’re spending time researching companies in the DevOps space that help developers easily transition between hybrid (on-prem, cloud, and multi-cloud) deployment environments, adopt microservices architectures, and drive more automation in software development life cycle.

Cybersecurity: Mitigating threats in the era of remote work

Cybersecurity has been a big priority for companies since the start of the pandemic, when work first shifted to remote environments. The definition of an enterprise firewall was pushed far beyond the boundaries of what used to be considered normal. Instead of secure data centers, critical work software and data were handled over employees’ home internet. “Shadow IT,” or employee adoption of outside software to aid with their work, became a growing concern.

Beefing up cybersecurity with versatile tools that could handle distributed workforces became critical to daily operations for businesses of all industries and all sizes. Early in this shift, B Capital group invested in Synack, a crowdsourced testing platform powered by the world’s most skilled ethical hackers, and Perimeter81, a cloud network security platform that develops secure remote networks based on zero-trust architecture.

In 2022, we expect grappling with application-level security and digital identity to be top concerns for companies and major drivers of innovation in the cybersecurity sector.

  • Fragmentation: The typical enterprise can use upwards of 200 to 300 applications between home-grown and third-party apps. That makes it very hard to weave in the right level of security and policy control across all of these applications, a problem that gets even more amplified with applications being accessed remotely from the cloud from employees in various locations. Cybersecurity tools that provide visibility and secure devices, applications, and API layers will be in high demand.
  • Identity: “Identity” no longer refers just to a human using an application. Identity could be an application talking to another application, or it could be all of the different multimodal ways in which we access an application. All of these identities and access points tie together, and companies need to make sure that they’re providing a seamless user experience across different devices and different applications.

Decentralized Internet: Embracing the new era of Web 3.0

The next shift in technology is the move towards a decentralized version of the Internet; one that is built on public blockchains and enabled by digital currencies and AI-based semantics.

The last year saw huge developments in this cutting-edge area. Banks finally started embracing digital currencies after fighting them for years. Non-fungible tokens (NFTs) found major momentum. Enterprises like Microstrategy, Tesla, Square among others are holding Bitcoin on their balance sheet to provide inflationary hedges.

In 2021, we invested primarily in digital asset infrastructure startups that are building the foundational blocks of decentralized finance, including:

  • FalconX, a digital asset trading platform
  • TRM Labs, a blockchain compliance and risk management platform
  • Figment, a blockchain node management and staking platform

In 2022, we’ll be doubling down on companies that create the building blocks and infrastructure layers that will be critical foundational layers in Web 3.0 innovation.

Looking at today’s critical enterprise software needs, it can be challenging to think about what comes after a seemingly unending period of uncertainty and volatility. But if the acceleration of digital transformation across virtually all industries during the pandemic is any indication, we are moving faster than might be apparent toward the next iteration of the internet. The time is right to invest both in startups that help companies meet today’s need to modernize, as well as those building foundational layers to support the next wave of innovation.

At B Capital, we are betting on both.

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