G2 features 1.5m reviews on thousands of software companies making it one of the largest software marketplaces in the world. It also offers information to help companies benchmark and optimize their software stack. CEO Godard Abel sat down with Latka for this interview.
- G2.com recently became a unicorn with a $1.1 billion valuation
- The company raised $257 million in investment capital, with its most recent funding round occurring in June
- 3,500 customers generate over $60m in revenue
How G2 Raised $257 million
Abel believes the best way to raise capital is by people coming to you vs. seeking funding. Many of its recent investors have approached them, he says.
G2 raised its $257 million over seven rounds, with the last round on June 22 being a Series D round with nine investors. Other rounds were:
- Oct.11, 2018 – Series C
- May 23, 2017 – Series B
- December 16, 2017 – Venture Round
- July 29, 2015 – Series A
- May 15, 2014 – Series A
- February 18, 2013 – Seed Round
The company has 22 investors, including Permira, Hubspot Ventures, LinkedIn, and Accel.
Will G2 Hit $100m In Revenue In 2022?
G2 has grown from an ARR of $39.984 million in 2019 to $60 million in 2021, and Abel believes $100 million is a realistic goal for 2022. The company has grown its customer base from 2,700 to 3,500 in two years. Out of that, 2,500 are G2 marketing solutions customers, and 1,000 are G2 Track customers. G2 has also grown its average revenue per unit (ARPU) from $1,666 to about $2,000 per month for SaaS companies on the marketing solution side of its business.
Throughout the company’s history, it has grown revenue by adding customers and by upselling customers.
The marketing solutions side of the business allows companies the opportunity to claim a profile for free, then upgrade it and highlight specific reviews for a fee. The company increases revenue by upselling enterprise marketing solutions clients to more profiles and premium profiles. Some clients will have more than 100 profiles at one time.
It also offers second-tier marketing solutions that add value by providing data about what types of software potential customers are shopping for and where they are in their purchase journey. The company continually adds integrations that automatically push the data into the client’s ABM platforms for activation.
Another way G2 upsells marketing solutions clients is to generate more content and allow customers to post G2 content on their own websites for a fee. Upselling marketing solutions clients will be one key to reaching $100 m ARR in 2022.
The buyer’s solution part of the business known as G2 Track is growing too, Abel says. Companies can save up to $3.3 million by eliminating software waste. G2 Track tells CIOs or CFOs which software has not been used. Increasingly G2 also is suggesting apps that similar companies have used successfully and is creating discount packages to allow customers to save if they buy these apps immediately.
Basic Track is free. Additional services are $300 a month, and enterprise customers pay $5 per employee.
The company uses a sales model adapted from LinkedIn. Several “new deal hunters” search for new business. When they close the new business, they turn it over to a relationship manager who is responsible for continuing to increase sales from that customer. G2 has found the use of new deal hunters to be more efficient than simply using lead generation techniques, Abel said in a 2019 interview.
The company does not plan any acquisitions in the near future, but it will partner with companies to continue to grow. G2 previously acquired Siftery, which helped boost its G2Track operations, on December 12, 2018. It acquired Advocately on March 7, 2019.
How High Can G2 Push Net Dollar Retention?
Although Abel won’t disclose the exact NRR, he says it is at least 100 percent. The company is seeking to make that 150 percent soon, he says. Over the long term, the company may aim for 170 percent, although an NRR this high is rare in the SaaS world.
How G2’s 500 Global Employees Contribute to Its Growth
G2, headquartered in Chicago, IL, has 500 global employees, about 150 of which are product engineers. Management has offered a secondary round of stock options to employees, and employees are beginning to see that their profits are real and becoming financially successful themselves.
“They are buying homes, and long-time employees can see this is real now. It’s not just on paper,” says Abel. The stock options are serving as significant incentives for employees to continue to innovate and grow the company.
The CEO, founders, and employees are another key to the company’s success. Abel brought his considerable experience in SaaS and other industries to G2.
Abel previously was CEO of SteelBrick, which was acquired by Salesforce in 2016. After that, he served as SVP/GM of the SteelBrick business unit until May 2017, when he left to refocus on entrepreneurial adventures. He also previously co-founded and built BigMachines into a leading SaaS provider that was acquired by Oracle in 2013.
Before entering the technology industry, he consulted for McKinsey & Co., advising leading manufacturers in the U.S. and Germany on strategy development and business process improvement. Crain’s Business Chicago named Abel to the Tech 50 list in September 2014. He was also named to the Chicago Entrepreneur Hall of Fame in 2011.
Other founders are Mark Myers, who serves as head of product and design; Matt Gorniak, chief revenue officer; Mike Wheeler, CTO; and Tim Handorf, president.
G2 continues to add integrations and develop partnerships to add value to both its marketing solutions division and G2 Track. Abel’s bets that focusing on these two items will help the company grow 80% over the next 12 months to $100m in revenue by December 2022.
How will others in the space like SoftwareReviews, Capterra, and GetApp respond?
