Today I had the opportunity to independently talk with two different entrepreneurs at my office. Coincidentally, both are working on B2C web app startups, whereas most I talk to are working on B2B startups. Each entrepreneur, late in the conversation, volunteered that they’ve found B2C startups in the Southeast few and far between. When it comes to angel investors, they’ve had even more difficulties as investors in the region prefer to see a clear revenue model.
I believe there are a number of B2C startups in the area, but since it is the minority compared to B2B startups, the sense of community has been more difficult to foster. In addition, B2C startups, all things being equal, have a more difficult time achieving success compared to B2B startups. Here are a few reasons why B2C can be more difficult than B2B in the Southeast:
- B2C startups often require an even slicker, more polished interface than business apps and good designers are hard to come by (outsourcing opportunity?)
- B2C startups often need to achieve a significantly greater number of users since the revenue per user is often very low (e.g. $.50 CPMs on advertisements requires a huge amount of traffic to generate a million in revenue)
- B2C startups, when raising money, have fewer local success stories and exits, to draw from
- B2C startups need a way to acquire customers in a low-cost manner through viral mechanisms, SEO, and more to achieve economies of scale, and it’s difficult to make that work
I hope to see a robust B2C startup community develop as there are a number of talented people working on those types of startups.
What else? What are your thoughts on B2C startups in the Southeast?