Business-to-business (B2B)

Business-to-business (B2B)

Author: The Carta Team
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Read time:  2 minutes
Published date:  6 June 2023
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Updated date:  11 April 2024
B2B stands for “business-to-business” and is used to describe companies, transactions, marketing, and other aspects of e-commerce. Learn whether the B2B business model is right for your startup.

What is a B2B company? 

B2B, which stands for “business-to-business,” is one of several business models a startup can choose, depending on whether its target customers are individual consumers or other businesses. B2B can also be used to refer to a specific deal, such as a B2B transaction or B2B sale, or to describe the way a product or service is advertised (for example, “B2B marketing”). 

Instead of selling products and services to individual consumers, B2B companies sell to other businesses. B2B is often contrasted with B2C, which is “business-to-consumer” and involves selling to individuals.

Tech companies that sell their software products to other businesses—known as B2B buyers or B2B customers—are considered B2B businesses. But the B2B market also includes wholesalers and other stakeholders in the supply chain. 

Instagram is one example of a company that can be classified as either B2B or B2C, depending on the type of account a user creates. If it’s a personal account, it’s B2C, but if it’s a business account or you are an advertiser, it falls under B2B.

B2B vs. B2C

B2B companies target other businesses as their audience, while B2C companies target individuals.

B2B company

B2C company

Target audience

Businesses

Individuals

Example

Salesforce: Provides customer relationship management software to businesses.

Nike: Sells sporting goods and apparel to individuals.

B2B e-commerce

B2B e-commerce refers to the process of buying and selling products or services online. It’s one of several popular business models for online companies, along with B2C, DTC (direct-to-consumer), and B2B2C (business-to-business-to-consumer).

B2B SaaS

SaaS stands for “software-as-a-service,” and is a type of business model where software is typically purchased as a subscription. B2B SaaS companies sell software subscriptions that are renewed on a recurring basis. A SaaS company’s software is cloud-based or app-based and is accessed via the internet—as opposed to software that is purchased as a one-time download to run on a specific machine.

B2B SaaS companies provide business-related software to other companies: Google and Microsoft provide email software through Gmail and Outlook; Zoom offers video conferencing and webinar software; and Carta provides cap table management software

In other cases, this software may be sold to an individual via a B2C company, such as a personal email service or video chatting service. Netflix and Spotify are two examples of B2C SaaS companies that provide software for video and music streaming services.

Enterprise software

When a B2B SaaS company sells software that helps larger organizations improve their operations, reduce costs, manage data, and increase profits, it’s called enterprise software. Customer relationship management (CRM) software and human resources management software (HRMS) are some examples of enterprise software.

As an early-stage startup founder, choosing the right business model for your company is crucial. Understanding the distinction between B2B and other models and evaluating your target audience will help you make an informed decision.

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The Carta Team
While we believe in assigning ownership at Carta, this blog post belongs to all of us.
DISCLOSURE: This communication is on behalf of eShares Inc., d/b/a Carta Inc. (“Carta”).  This communication is for informational purposes only, and contains general information only.  Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.  This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests.  Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor.  This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein.  ©2023 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved. Reproduction prohibited.