There’s a common belief I hear among founders and investors when it comes to equity crowdfunding. The belief is that consumer-focused companies tend to perform better at raising capital from the crowd than enterprise-focused businesses.

On the surface, this makes sense. Consumers can more easily understand consumer-focused solutions and perhaps even visualize themselves as potential customers. Also, brands that sell to large groups of engaged consumers may have an easier time activating that audience and turning them into investors.

But is this belief true? And in terms of investment outcomes, does investing in consumer-focused companies lead to higher potential returns for investors?

In today’s Chart of the Week, we’re diving into the data to explore how B2C (business-to-consumer) and B2B (business-to-business) companies stack up. We’ll be exploring the data across various charts:

B2C vs. B2B Issuer Breakdown in Equity Crowdfunding

Pie chart showing the breakdown of B2B vs. B2C in equity crowdfunding 2023-2024

To understand how different types of companies perform in equity crowdfunding, we need to look at their primary distribution models. A distribution model describes how a company delivers its products or services to its end users. This model is critical because it influences everything from marketing strategies to sales processes and customer engagement.

As we can see in the 2023-2024 data, roughly one-third of all Reg CF raises were pure B2C models. One-quarter were pure B2B models, while the remaining 40% were mostly made up of hybrid models (both B2B and B2C, or B2B2C).

At KingsCrowd, we track four primary distribution models:

  • B2B (Business-to-Business): These companies sell their products or services to other businesses. The sales cycles are often longer, and the relationships more complex, but B2B companies often benefit from recurring revenue streams, such as SaaS models, which provide more predictable cash flow. Examples: Salesforce, which provides CRM software to businesses, and Slack, which offers communication tools for teams.
  • B2C (Business-to-Consumer): These companies sell directly to consumers. B2C companies often need to work hard to build and maintain customer loyalty, with high churn rates being common. However, they can scale quickly, especially with the help of digital marketing and e-commerce platforms, potentially leading to high returns if successful. Examples: Netflix, which provides streaming services to consumers, and Nike, which sells athletic wear directly to customers.
  • B2B2C (Business-to-Business-to-Consumer): These companies sell their products or services to businesses, which then sell to consumers. This model allows companies to leverage business relationships to reach end consumers, combining elements of both B2B and B2C strategies. Examples: Instacart, which partners with grocery stores to deliver groceries to consumers, and Shopify, which provides e-commerce tools to businesses that sell to consumers.
  • Hybrid (B2B/B2C): Some companies operate in both B2B and B2C spaces. They sell directly to consumers while also maintaining business clients. This hybrid approach can diversify revenue streams but requires balancing the differing needs and expectations of both types of customers. Examples: Amazon, which sells products to consumers and offers cloud services to businesses, and Microsoft, which sells software to both consumers and enterprises.

Additionally, KingsCrowd collects data on C2C (Consumer-to-Consumer) models, such as marketplaces where consumers sell to other consumers. For the purposes of this analysis, we’ll combine C2C into the B2C category to simplify our charts.

Takeaway 1: Although one-third (1/3) of all equity raises are consumer-focused, the remaining two-thirds (2/3) are either pure B2B or hybrid models. Therefore, the data does not clearly show a strong skew towards B2C businesses in Reg CF raises.

B2B vs. B2C Business Valuations in Equity Crowdfunding

Another key consideration when evaluating active investment opportunities is the valuation of the business.

The median valuation can provide insights into how the market perceives the potential of different types of companies. The median tends to be a more useful representation of the data, since averages can be skewed by outliers (e.g. a single company with a $2 billion valuation would likely skew smaller datasets, but would likely not impact the median dataset, which means that half the companies fall below that data point and half the companies are above).

The next chart highlights the median valuations for Reg CF companies based on their primary distribution model. We compare B2B, B2C, B2B/B2C hybrid, and B2B2C companies at both the early stage and growth stage for all Reg CF equity raises January 2023 – May 2024.

Median Valuation Chart for B2B vs. B2C Companies in ECF

Interestingly, at the Early Stage, the distribution model did not correlate with significant differences in median valuation, with all models averaging around $10 million. This makes sense because early-stage valuations often rely more on the team and market potential rather than existing revenue, which is typically minimal or non-existent at this stage.

However, the median valuations change considerably for Growth Stage companies. B2C growth stage businesses had the lowest median valuation at $30 million, whereas B2B growth stage businesses commanded the highest median valuation at $50 million. Potential reasons for this may include B2B businesses having larger, well-established enterprise customers, more predictable revenues, and more consistent customer acquisition.

At KingsCrowd, we define Growth Stage companies as those meeting at least one of the following criteria:

  • Annual Revenue greater than $1 million
  • Prior capital raised greater than $5 million
  • A valuation of $50 million or more

This helps us to bucket raises in a way that we aren’t comparing a brand new, pre-revenue company against a company with an established brand and tens of millions in revenue.

What makes this observation somewhat surprising is that – for post-revenue companies (those with at least $50k in revenue), the B2B companies in the same dataset actually had a lower median annual revenue and a lower annual revenue growth rate than the B2C companies, despite the B2B companies having a 66% higher median valuation:

Bar chart showing B2B vs. B2C annual revenue and annual revenue growth for Reg CF

Source: KingsCrowd, Reg CF, 2023-2024 successful raises

B2C and B2B2C companies had the highest median annual revenues at roughly $800,000 per year, while B2B/B2C hybrid models saw the highest median annual revenue growth rate at 14.2% per year.

Takeaway 2: In the Early Stage, median valuations for B2B and B2C distribution models are relatively uniform, all around $10 million. However, at the Growth Stage, B2B companies commanded nearly 66% higher median valuations ($50 million) compared to B2C companies ($30 million) – despite B2B companies having a lower median annual revenue and growth rate.

B2B vs. B2C Investment Success and Failures

From an investor’s perspective, the ultimate goal is to determine which type of business — B2B or B2C — may lead to better returns on investment.

As discussed in our prior analysis of exits and failures to date in investment crowdfunding, it’s still a bit early to be drawing any major conclusions. With those caveats in mind, using the KingsCrowd Exit and Failure tracker data of over 378 investment outcomes to date, we can begin to analyze the investment outcome trends for B2B versus B2C companies.

Exits and Failures by Distribution Model

  • Exits: IPO, M&A, repurchase/buyback, or return of capital
  • Failures: Asset Sale, bankruptcy, or shut down business

Note that this data includes all exits and failures recorded by KingsCrowd with distribution model data (188 total), not just those since January 2023, as seen in the other charts. This broader range is necessary because there are fewer exits and failures expected for companies that raised funds in the past 18 months.

Distribution Model Exits Failures Total Raises
B2B 12 (0.9%) 29 (2.3%) 1272
B2B/B2C 7 (0.4%) 47 (2.5%) 1867
B2B2C 2 (0.7%) 11 (3.9%) 284
B2C 9 (0.3%) 71 (2.7%) 2664

Of particular note, B2B2C companies have a relatively high failure rate (3.9%) and a modest exit rate (0.7%). This model’s complexity, involving both business and consumer markets, might contribute to the higher failure rate, as these companies navigate the challenges of serving two different customer bases.

The failure rates of pure B2B and B2C models have not been vastly different to date — 2.3% for B2B and 2.7% for B2C. However, B2B companies have tended to notch a relatively higher number of exits, seeing a relative 3X increase in exits compared to pure B2C companies. Within those exits, B2C companies have seen 5 IPOs to date, while B2B companies have seen 3 IPOs to date.

What are some of the other potential reasons for differences in B2B vs. B2C exits and failures to date?

B2C companies often face intense competition and the challenge of maintaining customer loyalty, but they also have the potential for rapid scaling and mass-market appeal. This can lead to higher volatility and risk, yet massive successes when they break through—think of household names like Netflix, Apple, Facebook, and Airbnb. This dynamic may explain the lower number of positive outcomes thus far for pure B2C companies, as they often need more time to scale successfully.

Conversely, B2B companies typically experience longer sales cycles and more stable revenue streams due to contractual agreements and recurring revenue models, such as SaaS. This stability can lead to steadier growth and lower failure rates, but the path to massive scaling is generally slower compared to B2C companies. Investors may view B2B revenue and growth as more stable and less impacted by competition and consumer trends. Consequently, in the current macroeconomic environment, it may be somewhat easier for B2B companies to secure follow-on funding compared to B2C companies, as shown by their slightly lower failure rates.

Takeaway: while failure rates for B2B and B2C models have been similar to date (May 2024), B2B companies have achieved a higher relative number of exits, including a 3X increase compared to pure B2C companies. This suggests that B2B companies may benefit from more stable revenue streams and investor confidence, and may explain the higher number of exits (mostly Merger & Acquisitions) compared to B2C.

B2B vs. B2C Capital Raise Amounts and Check Sizes

On the founder side, most entrepreneurs are probably wondering if there are any major differences in B2B vs. B2C companies in terms of how much capital is raised online under Reg CF.

First, in terms of the most popular Reg CF raises since 2023 (those that raised more than $3 million), we can see that there were actually more B2B companies that raised over $3 million compared to B2C companies:

Count Raises over 3 million B2B B2C

Next, looking at the median capital raised and median check size for raises since January 2023, we can see that the consumer-focused models do tend to raise more than B2B, although with a significantly smaller average check size:

Distribution Model Median Capital Raised Median Investors Median Check Size
B2B  $97,682 47  $2,078
B2B/B2C  $125,787 85  $1,480
B2C  $123,056 89  $1,383
B2B2C  $112,033 82  $1,366

This again makes intuitive sense. When looking at the “typical” median raise (not the $3 million+ raises), here are some potential reasons why consumer-focused companies tend to raise more capital but with smaller average check sizes:

Broad Appeal to Individual Investors

B2C companies often have a broad appeal because individual investors can relate to and understand consumer products and services. Potential customers might be more willing to invest smaller amounts in a company whose products they use or believe in.

Larger Investor Base

B2C campaigns tend to attract a larger number of investors compared to B2B campaigns. The median number of investors for B2C companies is higher, indicating wider interest and smaller individual investments.

Emotional Investment

Consumers might invest in B2C companies not just for financial returns but also out of loyalty or personal belief in the product or mission. This emotional connection can drive higher participation rates, albeit with smaller investments.

Campaign Perks

Another reason consumers may invest for non-financial reasons is the appeal of campaign perks, especially discounts or special offers related to the consumer product being offered.

Marketing and Reach

B2C companies often use marketing strategies that resonate well with the general public, leveraging social media and other platforms to reach a broad audience. These campaigns can generate significant interest, resulting in more but smaller investments.

Professional Investors and Larger Checks in B2B

B2B companies may appeal more to professional investors or institutions, who are likely to invest larger sums per check. This can lead to fewer investors overall but higher median check sizes.

Business Model Complexity

Investing in B2B companies often requires a deeper understanding of the business model and industry. This complexity might attract more knowledgeable investors who are willing to invest larger amounts.

Takeaway: B2C companies tend to raise more capital ($123,056) with smaller median check sizes ($1,383) compared to B2B companies, which raise less capital ($97,682) but with larger check sizes ($2,078). This difference may be due to the broader appeal and larger investor base of consumer-focused companies, while B2B companies attract fewer, larger investments from professional investors.


There’s a common belief that consumer-focused companies perform better in equity crowdfunding than enterprise-focused businesses. Our analysis shows that while B2C companies attract slightly more investors and raise more capital ($123k for B2C vs. $98k for B2B), they do so with smaller check sizes compared to B2B.

B2B companies, on the other hand, tend to achieve higher valuations at the growth stage (with less traction, as defined by revenue and growth rates) and have more exits to date, particularly through mergers and acquisitions.

So, are consumer companies “better-suited” for equity crowdfunding? When looking at the median (and some of the recent max raises, like Substack and beehiiv) – perhaps they have a slight edge over B2B companies when it comes to attracting media attention and getting more investors.

However, there are countless examples of successful B2B companies in equity crowdfunding. In fact, there have been slightly more B2B companies (12) that have raised over $3 million since 2023 compared to B2C companies (10). And when it comes to what is better for investors from a risk vs. returns perspective, the verdict is still out.