Building a Better Marketplace for Enterprise Software Sales
Introduction:
When Sahil Khanna and Kevin Hughes, founders of Sagetap, started working at early-stage enterprise software startups, they were surprised to find that these companies were relying on outdated methods like cold emails and calls to sell their innovative tech. Recognizing the inefficiency of these methods, they decided to create a better solution.
The Problem:
Executives in the enterprise software industry are overwhelmed by the number of vendors and struggle to identify credible options. With nearly 400 enterprise tech unicorns and countless other startups in the market, according to CB Insights, the problem of vendor credibility is prevalent.
The Solution:
To address these issues, Khanna and Hughes launched Sagetap, initially as a platform for buyers to research and explore software options. This strategy allowed Sagetap to reach $1 million in ARR. However, they wanted to go beyond being just a gathering place for buyers.
The AI-Powered Marketplace:
Sagetap evolved into an AI-powered marketplace that combines research with intelligent recommendations. Buyers can browse Sagetap’s database of vetted software vendors and pay a subscription fee to stay listed. The platform provides valuable information such as purchase prices and anonymized feedback from sales calls processed by Sagetap’s AI. By using AI to rank vendors and recommend options based on the buyer’s criteria, Sagetap aims to bring efficiency to the enterprise sales industry, similar to what Uber and Airbnb did for their respective sectors.
Profitability and Funding:
Sagetap claims to be profitable, generating revenue through vendor subscriptions and booked meetings on the platform. In a recent seed round led by NFX, Sagetap raised $6.8 million with participation from VCs including Uncorrelated Ventures and Emergent Ventures. Notably, 15 of their customers, including Oracle, Dell, SecureFrame, and Descope, were the driving force behind the funding round.
Focus on Key Categories:
While there are existing enterprise software marketplaces, Sagetap focuses on areas that buyers are currently most interested in, such as cybersecurity, AI infrastructure, and dev ops. By concentrating on these categories, Sagetap aims to provide specialized and relevant options to its users.
Differentiating Factor:
What sets Sagetap apart from other marketplace platforms is its use of AI to analyze sales calls for recommendations. While many companies have incorporated AI into the sales process, they often focus on automating existing methods. Sagetap, on the other hand, offers a truly different approach.
Potential for Startups:
Sagetap receives numerous pitches from VCs looking to promote their portfolio companies. This suggests that the platform could serve as a valuable marketing tool for enterprise software startups seeking visibility among large buyers. However, it’s important to note that Sagetap only allows vendors on the platform after vetting them for customer engagement, funding, and market traction. While this approach may appear pay-to-play, 73% of vendors who reach out are ultimately listed.
Positive Reception:
Despite some concerns, buyers have shown satisfaction with Sagetap’s services. Over the past five years, the platform has attracted 5,000 buyers, with revenue growing 2.7 times year over year. This growth indicates that Sagetap’s engine is working effectively.
Conclusion:
Sagetap has successfully addressed the challenges faced by enterprise software buyers and sellers through its AI-powered marketplace. By providing vetted vendors, valuable insights, and intelligent recommendations, Sagetap has created a platform that brings efficiency and credibility to the industry. With plans to expand its community of technology experts and increase market visibility, Sagetap is poised for continued growth in the coming years.