Venture capitalists from around the world pumped their money into the B2B segment this past week. But it’s not just the investors that are going global. The startups getting backed by these backers are themselves creating innovative tools to facilitate businesses’ international operations. The eCommerce procurement trend means companies can now obtain goods and services from manufacturers halfway around the planet. That access means suppliers will need to adequately navigate the complexities of a global supply chain, which include challenges in cross-border payments and foreign exchange. As the demand for streamlining global B2B ventures grows, startups are working to make this process a bit more frictionless, and VCs everywhere are helping out the effort. This week, investors placed more than $1.2 billion in the young companies solving today’s global B2B challenges.
The week in B2B backing began with a bang on Tuesday (May 26) as B2B technology giant EMC gave birth to the market’s latest unicorn thanks to its acquisition of Virtustream, an enterprise cloud service provider, for $1.2 billion. The company provides data Software-as-a-Serice and runs its own data storage centers to take on various computing jobs for businesses. The company is designed specifically to support SAP applications, reports said, which can flood and overwhelm businesses with Big Data. Interestingly, EMC has been faced with the threat of rising cloud services, which could take some of EMC’s storage service market away. But in recent months, EMC has positioned itself in the cloud storage industry, in part from its previous acquisition of software vendor VMware. It was the largest reported investment of the week, but certainly not the only one.
Also in the U.S., customer engagement startup Clutch, which recently refocused its business on the B2B industry, revealed a $5 million backing from Safeguard Scientifics, which has now provided a total of $12.3 million in the company. Reports said Clutch, which employs workers in both the U.S. and Europe, will use the funding to boost its sales and marketing efforts.
News of another B2B merger hit Tuesday when reports emerged that supply chain service firm HighJump acquired eCommerce SaaS and platform provider Nexternal. Financial details of the deal were not reported. The merger signals the support of B2B firms in strengthening their digital operations, which is becoming an increasingly difficult task in a world with fewer borders. Supply chain management will be crucial to the incoming generation of suppliers called upon to provide products and services to corporate buyers around the globe. And many of those buyers are likely to have struck that purchase agreement through an eCommerce platform. Together, HighJump and Nexternal will offer a one-two punch that strengthens businesses to operate on a global front.
More B2B funding is headed towards the U.S., too. Venture capital group Rockaway Capital revealed Wednesday (May 27) that it is expanding its funding operations, currently running in Prague and Brazil, into the U.S. with the opening of a San Francisco office. Rockaway will aim its backing to B2B startups in the eCommerce, SaaS, FinTech and travel markets, reports said, and already has access to $225 million in funding after investing $28 million in seed-stage firms. The majority of its focus so far has been throughout Europe, reports said, with a goal of bringing offline companies to the online world.
Rockaway Capital CEO Jakub Harvlant expanded on his firm’s decision to spread its reach into the U.S. market. “There is a vacuum in the European region with few VCs and a talented pool of engineers and startups,” he said in a statement. “Through our broad industry experience as entrepreneurs and deep pool of resources and capital, we are building the Internet economy in emerging markets and helping to grow these promising companies in the U.S.”
Several of last week’s B2B investments crossed national borders. One international backing occurred Wednesday in the form of an acquisition backed by U.S.- and U.K.-based investment firm Crescent Capital. In an announcement, Crescent announced that its European Specialty Lending arm has reached an agreement to support global alternative asset manager The Carlyle Group and its acquisition of IT infrastructure support service Telvent Global Services, based in Spain and Portugal. According to Christine Vanden Beukel, the Managing Director of Crescent’s European Specialty Lending strategy, the backing shows Crescent’s support of the strengthening market in Spain and Portugal for IT services like Telvent among middle market companies.
The World Bank is no stranger to the global economy, and on Tuesday, its investment arm, the International Finance Corporation, zeroed in on Turkey to place its financial backing. According to reports, payment service provider Iyzico secured $6.2 million in Series B funding from the IFC, with participation from other backers including Istanbul-based VC 212 and Austria-based Speedinvest.
Iyzico is often referred to as the “Stripe of Turkey” as it operates in the same segment as San Francisco-based Stripe, providing eCommerce companies with the technology needed to accept digital payments. Reports said the startup will use the backing to “scale its payment technology globally,” leaving no doubt that Iyzico has set its goals on an international scale.
Venture capitalists this past week were also supportive of SMEs’ own international efforts. U.K.-based Kantox, which provides currency exchange and cross-border services for SMEs, said Wednesday that it secured an $11 million Series B funding round backed by several VCs. The startup’s platform facilitates P2P currency transactions, allowing smaller businesses to gain a better rate from cross-border transactions than they would if done through a traditional bank. According to founder Philippe Gelis, Kantox was built with the understanding that large corporations already have the resources in place to manage their foreign exchange.
“On the contrary,” he added, “SMEs and mid-caps are unable to do so and find themselves at the mercy of banks and traditional FX brokers.” As B2B buyers explore access to supplies from manufacturers around the globe, and as the B2B segment strengthens its eCommerce adoption, managing cross-border transactions and foreign exchange will be crucial for today’s smaller suppliers and buyers.
The reach of B2B investors hit Asia, too. Startup debt financer InnoVen Capital, based in India with ties to Silicon Valley Bank but recently acquired by Singapore’s state-owned investment group Temasek, revealed Wednesday several new portfolio startups, some of which land square in the B2B sector. According to reports, InnoVen has backed SaaS firm Capillary Technologies, B2B eCommerce firm Power2SME, and two eCommerce companies, Collectabillia and eShakti. With a portfolio history of backing the likes of Snapdeal and Freecharge, InnoVen Capital has a strong track record and claims to be the largest debt financer of VC-backed startups.
“Over the years, venture debt is becoming a more accepted and critical part of a company’s financing mix as entrepreneurs understand its role and benefits alongside that of venture capital,” said InnoVen Capital CEO and managing director Ajay Hattangdi.
Separately, B2B sales service provider ChinaNet Online snagged $1.25 million on Thursday (May 28) from Beijing-based Dongsys Innovation Technology Development Co., which itself secured 1 million shares of the IT firm. According to reports, ChinaNet Online said it will use the backing as working capital to fuel IT research and development, expand its staff and explore new products as it looks to strengthen its service of providing both online and offline sales channel expansion tools. Specifically, the firm said the funding will boost its Business Direct 3.0 product.
“The investment is also very positive for us to help increase our market penetration in the SME segment,” said ChinaNet Online COO George Chu in a statement, adding that Dongsys’s video conferencing and other software products, targeted to individual consumers, will be beneficial for the SME community within ChinaNet Online as well.
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