Co-founders Godard Abel and Tim Handorf
G2 Crowd got its start crowdsourcing reviews of business software. Now it wants a bigger piece of the action.
The Chicago-based company raised another $55 million, led by IVP, a Silicon Valley venture fund that backed Coinbase, Dropbox, Kayak, MuleSoft, Netflix, Twitter and Uber. It also invested in G2 Crowd founder Godard Abel’s previous software startup, SteelBrick. Other investors include Silicon Valley venture funds Emergence Capital and Accel Partners, and Chicago-based Pritzker Group Venture Capital.
Abel and Tim Handorf, who previously teamed up at BigMachines, founded G2 Crowd in 2013 with the idea of creating “a Yelp for business software,”
with the idea of creating an alternative for software publishers to reach customers outside the traditional research firms such as Forrester, Gartner and IDC. Abel, who recently returned to G2 Crowd as CEO after selling SteelBrick to Salesforce, now has a more ambitious plan “to become the next Amazon for business.”
G2 Crowd accumulated about 23 million users with free reviews of software. It also makes money selling subscriptions to software makers that allow them to add customized content to their profiles and obtain data about companies who have looked at G2’s information on their software, as well as competitors they checked out. Subscribers also can offer a link to request a demo.
As software has evolved beyond big, expensive companywide installations to more niche products sold on a subscription, more businesses are buying software with credit cards. G2 Crowd wants to build a marketplace that allows software makers to sell their products on its site. “Users want to run an RFP process and transact, not just do research,” said Ryan Bonnici, chief marketing officer.
Chris Doig, who runs Wayferry, a software-selection consulting firm in Carlsbad, Calif., says there are about 10 companies in the space, including TrustRadius and IT Central Station. He uses G2 Crowd “a lot when I’m looking for products. But the problem with review sites is they can only help you start your search. They can’t really tell you how useful the software is to your particular company.”
He says the transaction market could be viable for G2 Crowd, especially for small and midsize businesses and departments in larger organizations.
G2 Crowd is growing fast. Its staff has doubled in the past year to more than 200, including about 150 in Chicago. Abel predicts its headcount will be five times higher within five years. Abel, a serial entrepreneur who sold SteelBrick and BigMachines to big software makers Salesforce and Oracle, has said he plans to take G2 Crowd public. That could provide big returns to early local investors that include Chicago Ventures and Hyde Park Venture Partners.
G2 Crowd’s revenue is growing faster than headcount, Bonnici said, though he would not provide specific figures. He says the company is preparing to expand into Europe. It’s also looking at possible acquisitions.