B2B versus B2C

Mindset Ventures
6 min readDec 12, 2022


B2B: a marketing blind spot

Walking on Times Square may be one of the closest experiences anyone may have to the essence of being bombarded by advertisements. Kodak, McDonald’s, Levi’s, and dozens of other brands fight fiercely with luminous panels to grab the eyeballs of passersby at almost any cost. But what takes place between the 7th and 8th avenues in New York is just one battlefield of the war fought for decades between the endless names that try to attract our attention daily through the daily news, magazines, TV, etc. The fact, though, is that the advertisement insistence seems much more powerful than most of us may feel. Next time you watch the news, take a few minutes to count how many ads come from companies focused on selling their products to customers versus the ones aimed at selling to other businesses (spoiler alert: you will probably not watch a single ad targeted at enterprises). What you will see will probably reinforce a misconception we’ve always been living with: that B2C is a way larger market than B2B.

While the frequency with which we are exposed to B2C ads may make us believe that B2B is a fraction of what consumer-focused companies represent for the global economy, the reality is quite the opposite. Separately calculating the total size of B2B and B2C economies may be a considerable burden, as it’s not always clear whether certain organizations are consumer- or business-focused (or both). However, estimates of the real size of B2B and B2C eCommerce markets were recently made. Despite different sources indicating discrepant numbers, B2B was put significantly ahead of B2C in terms of size every time. According to eCommerceDB, in 2020, the B2B eCommerce market generated revenues of $14.9 trillion, more than five times what B2C organizations generated, possibly growing to more than $25.6 trillion by 2028, as Grand View Research pointed out. Although we are referring to eCommerce companies specifically, the trend is valid for the entire B2B and B2C industries. As a matter of curiosity, in early 2020, Jonathan Knowles compiled the revenues of companies from 20 of the most representative sectors of the American economy by B2B or B2C predominance, concluding that B2B is indeed more representative than most of us may wonder, not only in terms of revenue generation, but also in terms of number of companies.

This reality is also true for venture capital, even if less intensively. According to Pitchbook, more than 39 thousand B2B startups were registered in its platform as of late November 2022, versus slightly more than 38 thousand B2C companies. The difference is smaller than the one observed in the industry as a whole, but it still breaks an old paradigm that B2C is more representative than B2B. Pitchbook also indicates a slightly bigger number of B2B deals concluded in 2021 compared with B2C, resulting in a 7% difference, as well as 10% more capital invested into B2B startups than in consumer-focused ones in the same year. In other words, for every Facebook out there, there’s a B2B counterparty driving hundreds of billions of dollars in revenues, but without turning heads like Twitter, Apple, and Amazon do.

Unbalancing the advantages

While it’s comprehensible that we are much more aware of B2C names than B2B ones, as we are the “C” at the end of the first expression, the solidity and resilience that enterprise-oriented companies tend to offer since early in their lives have been responsible for catching investors’ attention the way they currently do. It is obviously true that successful consumer-focused companies expand quicker than B2B ones in most cases. Still, it usually comes as a necessity to balance the financial aspect of their operations, given their tighter margins. And, while B2C companies spend most of their sales efforts on continuously acquiring new customers, B2B firms focus on retaining existing clients, which costs on average five times less than looking for new ones. Also, after the B2B solution is properly implemented, taking a step back requires a substantial effort in most cases, which greatly contributes to client retention on the B2B side.

B2B firms usually generate revenues considerably earlier than B2C organizations. Some consumer-oriented firms prioritize expanding their client base and collecting customer data to monetize it in a second moment, giving up on revenue generation for years before figuring out how to profit. Curiously, after a long time being justifiable to investors, this method has finally started to be questioned, as VCs recently began to give traction more weight in the analysis of startups. B2B, on the other hand, cannot postpone revenues or depend on data monetization or client base expansion. Most B2B firms work on the retention and upsell of a few strategic clients more than anything else, generating revenues early in their lives, which indicates whether their solution really works and how crucial it really is for the clients.

Statistically speaking, B2B startups also present another advantage over their B2C counterparties: liquidity. From early 2013 to late 2022, liquidity on the B2B side was more relevant, with approximately 7,400 exits, versus nearly 6,000 exits of consumer-focused firms. And, contradicting the consensus, the theory that IPOs in B2C are more frequent seems a myth, as 13.9% of all B2B exits took place through IPOs, versus 11.6% in B2C, according to Pitchbook.

Generally speaking, it has already been some time since the venture capital market started to bet on B2B as much as on B2C, to the point that not rarely B2B companies are associated with more prudent investments than B2C, an idea that has been becoming stronger as revenue generation gain more importance through VCs’ perspectives. Despite such generalization seeming exaggerated, it has some foundation. Throughout the past few years, for example, according to Pitchbook, early-stage B2C startups’ valuation naturally decreased both during the pandemic and as a consequence of the current market volatility, despite the long-term increase. Early-stage B2B firms, on the other hand, had their valuation rising uninterruptedly since 2019, increasingly attracting the attention of those giving traction more importance than before.

In line with this rationale, in the past few years B2B pre-money exit valuations outgrew B2C’s. On average, B2C firms tend to take longer to be exited, which means they do so at later stages and, consequently, at higher valuations. Also, B2C startups are less frequently exited through M&As or strategic transactions, which usually comprise less expressive values, regardless of the exit multiples. Since 2019, though (except for 2021, which was atypical in terms of valuations for the entire venture capital market), B2B firms also beat B2C startups on valuation, reflecting the fact that investors are willing to pay more for those firms that proved operationally feasible and resilient through revenue generation.


The pace with which B2B has been growing seems irreversible for the next few years, so we shouldn’t experience big surprises regarding its proportion versus the B2C market. Part of the reason for such a trend is the fact that, after two consecutive general price adjustments in a two-year span, investors started to assess startups through other perspectives, demanding revenue generation even from B2C startups earlier in their lives as a way to ensure valuations have some foundation and are not exaggerated.

It is still early to assume that the way investors will behave towards B2C will structurally shift, given that the first few changes have just started to take place. However, it is almost granted that B2C startups will start adopting some of the characteristics responsible for the resilience that B2B firms have presented throughout the past few years.