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There's a new wave of Israeli startups out there: meet the pioneers in B2C, B2SMB, and Passionware

Opinion

There's a new wave of Israeli startups out there: meet the pioneers in B2C, B2SMB, and Passionware

At Benson Oak Ventures, we have a core investment thesis around the concept of the ownership / passion economy. We dub “passionware” as the new category of software tools and platforms enabling anyone to be an entrepreneur, run a business to earn a living and, at the same time, fulfill one’s passions

Robert Cohen | 15:48  29.03.2021

Israel is well-known for deep tech in cybersecurity, innovative business solutions, artificial intelligence and much more. What is less known is that Israeli founders have also been very active- and hugely successful - in leveraging innovative ideas, technologies, combined with creative approaches and business models, to build global brands around B2C and Digital SMB and the overall ownership economy.

In the last week alone, we have seen funding and IPO news from three Israeli B2C and B2SMB unicorns (Hippo, Yotpo, and eToro as a mega unicorn). Joining Wix, Lemonade, Monday.com, Fiverr and others, these type of unicorns increasingly represent the new norm of Israeli tech ecosystem as this new wave of startups create, transform and disrupt industries to capture new opportunities on a global scale.

Israel Israel's passionscape. Photo: Benson Oak Ventures Israel

The Passionscape reflects the new array of Israeli startups focused on B2C and B2SMB, enabling both the creation and distribution of products, services and platforms for consumer and prosumers alike. The category we call Passionware increasingly blurs the line between B2C and B2SMB, providing tools for entrepreneurs to create, grow and scale their businesses and distribute to consumers on a global scale.

While these categories can have different value propositions, user personas, business models (as is the case with everything under "B2B"), they tend to share important characteristics that blur their distinctions. Most entrepreneurs who start their own business (so called SMBs) - whether a "lifestyle" business, a tech startup, or passion-based business - think, act and purchase the same way as mass market consumers when it comes to choosing a product to drive their business. As a result, we see the convergence of many attributes for what can be termed a "consumer" and "prosumer".

  • Product. B2C and B2SMB products share qualities of easy to use, great UX and UI and give user a sense of ownership and control - whether it is an app, service, product or core infrastructure. SMBs do not typically have a CTO or CIO to vet and implement internal tools and product. Therefore, B2C and B2SMB-focused companies equally require product and leadership teams that have the mindset of "direct to consumer" and ensure development of a lightweight product offering. This is why so many such companies are able to sell to both user bases with very similar product offerings.

  • Brand. Consumers and Prosumers both want and rely on a brand they feel they can trust for purchase decisions.

  • Customer Acquisition. Most B2C and B2SMB companies do not have inside sales teams but must rely on performance marketing, organic and word of mouth (see brand) and great customer support that treats their user base as a community. Pricing and plans must be simple, direct and enable trials to engender trust and brand loyalty. This mindset again allows companies to navigate both worlds.

What is Passionware again?

Passionware = tools enabling the creation and distribution of products and services stemming from people’s own creativity.

Passionware represents the new wave of tools enabling anyone to be an entrepreneur, run a business to earn a living and, at the same time, chase one’s passions.

What is the correlation between Passionware and B2C and B2SMB?

As outlined in the referenced post, we see Passionware as covering the dual aspects of

- infrastructure and creation tools (for entrepenuers) and

- distribution aspects to the community through marketplaces and platforms

This requires the exact same mindset outlined above - light and easy to use product, focus on brand and scalable customer acquisition techniques.

Passionware companies enable entrepreneurs to be a digital business (Shopify, Wix, Honeybook and all types of XYZ-Tech verticals) and in some cases go a step further and also provide a branded platform itself for distribution (Fiverr, Patreon, Kre8). Many passionware companies represent basic building blocks of B2SMB infrastructure and we have placed them in their respective verticals. We use here a separate “passionware” vertical to highlight the companies that operate an entire business (not just one department) and/or provide external platforms as well. Frankly, its an art not a science!

For example, we see passionware companies representing the next wave of e-commerce, bringing together passion-based creators with an audience. We also have vertical for e-commerce itself which represents companies selling their own wares directly to consumers (eg from glasses to kid clothes, to even bras! But passionware companies on this list power entire businesses encompassing content creation, artisans and even dog-walking (as owner of dogs, I call this a passion, not a gig!).

Oh, and we use a different color to showcase the passion we feel about this new vertical!

Why is Blockchain & Crypto category the same color as Passionware?

We see blockchain as having a key role in the evolution of the Passion Economy as an enabler of entrepreneurship and currency for passion-based economies. The use of digital branded currencies and incentives will foster more synergies and participation between creators and followers. The use of new incentives and community involvement will serve to complement mass market customer acquisition and reduce reliance on performance marketing and inside sales teams. Blockchain and its digital branded currencies and incentives enables true cooperation and ways to involve and compensate your followers. These decentralized micro-economies will not only support the new passion-based entrepreneurs to make a living, but also have potential to grow into macro-economies whose branches foster scale from contributors to the ecosystem at multiples levels.

At Benson Oak Ventures, we believe that we all will increasingly live in a world where "blockchain tech" is an enabler of marketplaces and business infrastructure - decoupled from the value of crypto. The new explosion in NFTs is a great example - building communities of creators and consumers by turning any asset into digital form (passionware on steroids), where no one needs to notice or care that blockchain is the technology that underlies the system. From creators to consumers to developers, everyone wins - well, everyone, except rent-seeking middle-men!

Robert Cohen, Managing Partner at Benson Oak Ventures. Photo: PR Robert Cohen, Managing Partner at Benson Oak Ventures. Photo: PR Robert Cohen, Managing Partner at Benson Oak Ventures. Photo: PR

Robert Cohen is Managing Director at Benson Oak Ventures

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