✨ volume 5 -- my yc w'20 b2b picks
favorite companies coming out of the latest yc batch. looking primarily at US-based companies in the b2b space. consumer-focused picks in the next post
Twice a year, the startup machine that is Y-Combinator spits out a batch (‘w20 n=197) of companies ready to change the world. Some are wildly successful — Stripe, Airbnb, Brex, Instacart, Reddit, Dropbox among others. Others (~158 to date) have shut their doors.
In this post I will highlight what I consider the most promising b2b companies YC funded in this batch.
Source: Nat Jin
Note: A good list of all Y-Combinator funded startups, their descriptions, classes, and current status can be found here.
Vori - Grocery Wholesale Marketplace & “Operating System”
Source: Company Website
Description: Operating system for the American grocery supply chain (TAM of $668b TAM as of 2016). Supermarkets currently still have an old school paper and pen ordering process with wholesale distributors. Vori streamlines the paper catalog-esque workflow by bridging supermarkets and distributors through its digital marketplace + added tech solutions (which also acts as a product discovery engine for supermarkets).
The company currently has 150 distributors in Northern California and 24 active stores.
Thoughts: The supermarket industry is difficult to disrupt for two top-of-mind reasons: (1) low margins (2) fragmentation of retail locations both by brand and geography. Think majority mom and pops which comprise ~60% of total grocery sales, and an even higher percentage of store locations, making 1-3% margins a pop.
With this in mind, software companies might have a difficult time selling difficult-to-prove ROI software to supermarkets unless 1) it dramatically improves productivity, which Vori does by promising to decrease order processing time by 5x (cost savings) and 2) increases top line (i.e. revenue generation through product discovery, which would be bolstered by a large network of distributors). On the other side of the table however, Vori seems like a no-brainer for distributors to list their produce on a public marketplace to reach a wider audience.
Curious about the pricing structure — are they taking a cut from wholesalers (small fraction of “listing” fee), or grocery stores (flat-rate software)?
Nonetheless, if Vori can successfully on-board distributors and stores alike, they could build a large moat in the grocery space where scale is difficult to achieve, disrupting the backends of a ~$700bn industry.
Battlecard - Automated Sales Team Training
Description: Sales team training through auto-generated simulations and battlecards for unifying company messaging. Currently has ~$35k in ARR, one month into launching.
Source: Company Website
Thoughts: Sales teams are incredibly mission critical, and current onboarding processes are very company-specific and for the most part, happen on a company spreadsheet / guidebook / google doc. To be able to expedite a new sales person’s onboarding from 6 months to 4, or 3 would be a huge cost saving (no longer paying 100k+ to an unramped sales person) and revenue generator (getting them to close deals faster). It would also unify the company’s messaging which is best controlled in the early stages of unified training.
No pricing data, but imagine it to be $/sales person with high price flexibility as shortening a sales head’s time to market is definitely more than a couple hundred dollars of software investment.
Handl - API Turning Paper into Searchable / Machine Readable Data
Description: An API for turning paper documents (handwritten, typed, poorly faxed, anything really) into structured, database / CRM ready data. Of course, with such levels of complexity and variation in inputs, 15% of data i.e. low AI-confidence data, is validated by humans.
Nine months after launch, the company is seeing an ARR of $0.9 million.
Source: Company Website
Thoughts: As much as digital documents is taking over the world (DocuSign, HelloSign, SignNow, PandaDoc, Adobe, etc.) much of world still exists on paper. In 2019, ~90% of business information exists only on paper, and non-productive information work such as reformatting documents or reentering documents into computers consumed more than $1.5 trillion in U.S. salaries in 2018. There is a huge addressable market for companies who can scalably and accurately transform paperflow into data while easily integrating into existing company data pipelines.
HYPHY - Monetizing User-Generated Brand Content #wereallinfluencers
Description: User-generated social media content is taking off and instead of brands looking for influencers through DMs or hash tags, anyone can upload the content they make onto HYPHY for advertisers to source for marketing or advertising campaigns.
Source: Company Website
Thoughts: In 2020, advertisers are predicted to spend $2.4bn in Instagram influencer marketing alone, with 500,000 active influencers on the platform yet only 39% of marketers feel like they can find the right influencer for their brand/product. Despite the lack of transparent matching between influencer and brand, IG influencer posts/stories still remains an incredibly effective platform for marketing in which brands are willing to invest. Now, imagine they had the transparency of a platform dedicated to this (and other user generated social media content).
The company is still in its early stages. Creators and brands are still in the process of registering and applying for profiles so visible traction yet documented but if HYPHY can properly monetize and scale this marketplace, I wouldn’t be surprised to see a lot more influencers among us lot.