In the age of social media, you’re only as good as your last like, and today a startup has raised a sizeable round of funding banking that the same maxim applies to software. G2 Crowd — a Chicago-based company that has built a platform for crowdsourcing enterprise software reviews to help others make decisions on what to use and buy — is today announcing that it has raised $30 million in funding at an undisclosed valuation, bringing the total raised to over $45 million.
The Series B round was led by Accel, with participation from Pritzker Group Venture Capital and G2 Crowd’s founders Tim Handorf, Mark Myers, Matt Gorniak, Mike Wheeler and Godard Abel (who founded BigMachines previously and sold it to Oracle for $400 million). And, perhaps most uniquely, the investor group includes LinkedIn, the social network for professionals acquired by Microsoft for $26.2 billion last year.
LinkedIn typically doesn’t invest in other companies — this actually appears to only be the third time it’s ever done so — and in this case Handorf, who is the CEO, tells me it’s because the two work closely together and may well do more in the future.
One of the most obvious places where it’s partnering now is in logins: G2 Crowd requires users to register themselves via their LinkedIn profiles in order to authenticate themselves and to help control against nefarious reviews of software from competitors and trolls. LinkedIn doesn’t allow cross posting to users’ profiles, but allows authenticated users to share G2 reviews onto LinkedIn and have it show up in their feed.
“G2 Crowd is a highly respected company with great insights into the B2B environment,” a spokesperson said. “We occasionally invest in companies that can inform our long-term business strategy, and in this case, we believe G2 Crowd can help us better understand and address the needs of our customers.” Handorf declined to comment on whether the investment was part of an attempted acquisition but noted that the company has been approached by others in recent times.
G2 Crowd is part of a large group of entities that have sprung up online that provide reviews and competitive analysis about various software products. However, most of these, Handorf points out, are based around affiliate revenue models, where the sites make money whenever users click on the links of the companies listed in their competitive lists.
Instead, he likens G2’s business model more to that of Glassdoor’s, the company review platform: “We don’t have advertising or give preference to companies who pay us,” he noted, “and we don’t do lead generation.”
Companies, as on Glassdoor, get free profiles and they can claim them to add in more information about what they do, downloads and so on. The other area where G2 Crowd is hoping to build out its business is in areas of analytics and research — competing against the likes of Forrester, Gartner and IDC for profiles and sector analysis — and also into other adjacent areas of products that businesses might need to buy, be it consulting or integration services, or perhaps even who the best company is to cater an event.
So far the formula has been working. Last year, there were 75,000 reviews posted on the site — triple the number from the year before, and this year G2 Crowd projects 225,000 reviews posted on the site.
Another area where G2 is quite compatible with LinkedIn is that both companies tend to have very strong SEO, meaning its results score highly on Google when you are looking things up (in the case of LinkedIn, people like “Ingrid Lunden”; and in the case of G2, things like “LinkedIn competitors.”)
This is a blessing and a curse: a blessing in that it brings a lot of visibility and traffic to the company’s services and potentially that will help feed in more reviews and drive more companies to claim and pay for their profiles. A curse because that leaves G2 Crowd somewhat at the mercy of Google, its algorithms and its longer-term ambitions of what it might want to do in various specific areas of vertical search. (Offering comparative software reviews and listings seems like a very obvious area for Google to tap at some point.)
For now, G2 Crowd continues to grow and meet the demands of a new landscape in the business world, where we collaborate and communicate as a matter of course.
“There is a paradigm shift occurring as B2B buyers increasingly behave like consumers, relying on authentic online reviews and social media to make purchase decisions and no other company is better suited to catalyze this market opportunity than G2 Crowd,” said Accel Partner, Arun Mathew, in a statement. “Accel has a long history of investing in market leading companies like Facebook, Dropbox, Slack, and Atlassian, and G2 Crowd is no exception. The company’s rapid growth and customer buy-in from leading tech innovators lends an extremely influential voice to the industry.”