Startup Spotlight #5: Redefining B2B Sales
Today's startup is turning the B2B software market on its head with a simple but unique approach.
About the Project
Let’s be frank: the current system for buying and selling B2B software is incredibly inefficient.
- Developers often resort to carpet bombing every possible company in their database with cold emails and calls, desperately hoping to find those in need of their software.
- Consequently, company representatives receive a flood of unsolicited messages, forcing them to sift through irrelevant offers to find what they truly need — or they might ignore these messages altogether and seek software solutions independently.
Sagetap aims to make this vicious cycle a thing of the past by creating a marketplace that connects B2B software developers with potential buyers in a rather unique way.
Companies register on the marketplace, after which they:
Indicate the software they currently use, along with renewal dates.
Describe planned initiatives/projects that require additional software solutions.
Meanwhile developers also register and create profiles of their ideal user()s, specifying the types of companies and the challenges these companies face that their software can address.
Sagetap’s AI then matches potential buyers with developers whose software could be a good fit, in the form of:
Replacements for existing software before upcoming renewals.
Solutions suitable for the company’s new initiatives or projects.
If a buyer expresses interest in a suggested product, Sagetap’s AI arranges an online meeting between the company’s representatives and the developer.
Notably, the company remains anonymous to the developer during this process, preventing unwanted messages and follow-ups if the meeting doesn’t lead to anything. The buyer reveals their identity only when ready to proceed with negotiations.
The platform collects feedback from buyers after each meeting, generating anonymous reports that inform developers why their product was or wasn’t appealing. This feedback helps developers refine their ideal client profiles, improve their offerings, and plan future product enhancements.
Another cool thing about Sagetap is that records and transcribes all negotiations hosted on its platform, ensuring that participants have accurate records and can analyze the discussions whenever it’s needed.
Currently, the marketplace boasts around 14,000 B2B software developers and 5,000+ buyers.
The sellers report tangible benefits from using Sagetap:
One noted that conversion rates to further negotiations doubled after initial meetings on the platform compared to traditional methods.
Another developer built a client queue interested in purchasing their software within two months, with potential orders totaling 8.5 times the amount spent to acquire these leads.
While the platform’s pricing structure isn’t explicitly detailed on the website, it likely combines subscription fees, charges per successful contact, and commissions on completed sales. Developers — the ones who actually profit from the platform — are presumably responsible for these costs.
Sagetap recently secured $6.8 million in new investments, bringing its total funding to $12.5 million.
What’s the gist?
The enterprise software market is currently valued at $251 billion and is projected to grow to $610 billion by 2032.
Sagetap’s founders, with their extensive backgrounds in B2B software startups, understand the challenges of entering this expansive and growing market. They note that 50% of such startups’ expenses go toward marketing and sales — covering advertising, conference participation, and sales team salaries — often with limited success due to ineffective cold outreach.
The founders believe that “Uber and Airbnb-like marketplaces”, but tailored to the specifics of the B2B market, are the inevitable future of this sector. Olive, another startup in this space, has developed and rolled out a similar marketplace, using AI to connect buyers to developers and raising $4.3 million in funding.
It’s worth noting that creators of marketplaces such as Sagetap and Olive have another potential revenue stream beyond subscription fees and sales commissions: financial technologies. According to the venture capital firm a16z, fintech is poised to become a new source of additional revenue for virtually all vertical SaaS's and marketplaces.
The idea is that a B2B marketplace has access to a whole host of valuable data: developers’ sales records and information on companies’ potential software purchases. With this data, the marketplace can offer financing to both developers and buyers, provided their history on the platform demonstrates financial reliability.
They could finance developers to help them scale sales operations or offer buyers loans and installment plans for software purchases. Marketplaces could then earn revenue from the interest on this financing. To fund such initiatives, they could attract investment or debt financing from external partners.
Key takeaways
The rapid emergence of AI-driven platforms like Sagetap and Olive highlights a significant shift in the B2B software sales landscape. Traditional sales methods — those heavily reliant on cold outreach — are becoming increasingly less effective and more resource-intensive.
AI-powered marketplaces offer a more efficient and targeted approach, benefiting both developers and buyers by facilitating meaningful connections and reducing unnecessary communication.
For developers, these platforms provide valuable insights into buyer preferences and feedback, enabling continuous improvement of products and sales strategies.
For buyers, they offer a streamlined process to discover software solutions tailored to their specific needs, minimizing the time and effort spent on searching and evaluation.
One more thing. It’s crucial to understand that in creating new sales channels for B2B software, buying is often harder than selling.
First, buyers carry a much heavier burden of responsibility for their purchase decisions. This explains the long sales cycles in B2B transactions — buyers take their time evaluating options and often try to spread responsibility by involving more participants in the decision-making process.
Second, the B2B market is a buyer’s market, not a seller’s market. This is evident on Sagetap, where 14,000 sellers are registered compared to “just” 5,000 buyer companies.
As a result, designing new architectures for B2B sales channels is essentially about building new procurement architectures — ones that help buyers make better-informed decisions with less time and stress.
Sagetap’s homepage reflects this approach perfectly. It’s geared not toward developers but toward buyers, promising to “reimagine the process of finding the right software.” The platform is explicitly designed for “busy people tired of being spammed by developers.”
This is a strong value proposition and a well-thought-out system that might be worth replicating. Especially considering that in the near future, the market for selling — or, more accurately, buying — enterprise software is poised to triple, reaching a massive $610 billion.
Company info:
Sagetap
Website: https://www.sagetap.io/
Last funding round: $6.8 million, 06.05.2024
Total funds raised: $12.5 million over 3 rounds