With an eye on capturing some of Gartner’s $6.28 billion market cap, the crowd sourced software review service G2 Crowd has raised $2.3 million in its first institutional round of financing.
The Chicago-based company touts itself as a Yelp for enterprise software, but investors like Stuart Larkins from Chicago Ventures think that the opportunity is actually larger. “The Gartners of the world only look at the very tops of the echelons,” Larkins says. “There are several verticals that can be served and nobody really tracks all of that.”
The ability to offer what amount to peer-reviews of new enterprise software as a service products is actually pretty persuasive. And while there are issues around some companies who might try to game the system with false positive reviews, the ability to use LinkedIn as the verification methodology for a person’s identity was persuasive enough to convince Larkins’ firm to invest in the company.
For G2 Crowd co-founder and serial entrepreneur Godard Abel, the decision to start the company was predicated on what he perceived as a huge hole in the enterprise market. “With the bigger trend of the consumerization of the enterprise, what surprised me was that there wasn’t a great site doing these reviews for business software.”
At his previous company, BigMachines, Abel says he saw customers struggling to determine who the right vendor was that could meet all of their needs — and that Gartner analysis often didn’t suffice.
“Innovators and disruptors are focused on making customers happy and they don’t want to wait for Gartner to recognize them,” Abel says.
Joining Chicago Ventures and co-investor Hyde Park Ventures in the G2 Crowd financing was a veritable who’s who of the Chicago and Midwestern investment scene, including: Tim Kopp, the former chief marketing officer of ExactTarget; Andrew Filipowski, the chairman of SilkRoad Equity; Greg Jones, founding chief executive of uBid and a partner at Edgewater Funds; Chris Shutts, who worked with Abel and his fellow co-founder Matt Gorniak at BigMachines.
Since launching the company in February 2013, more than 13,000 business professionals have signed up to contribute 12,000 reviews of 3,000 business software, according to data provided by the company.
Other companies like SoftwareAdvice, which was bought by Gartner earlier this year; or GetApp, offer similar services. And the success of a company like Spiceworks, which has raised $111 million to develop a community for business IT users, shows how these services can gain traction and scale in the market.
Software is a several trillion dollar industry and as more businesses from mom and pop coffee shops to artisanal picklers get plugged in to software services that can save their companies time and money the number of trillions spent on business tech will only rise.
“I think it opens up the marketplace to lots of folks who wouldn’t get seen or heard,” says Larkins. “It lets products like that come to light a lot more.”