This level of activity, combined with a confluence of other factors is creating a catalytic effect, and as a result, 2020 could be the year that B2B payment innovation actually outpaces B2C.
Prior to the crisis, projections saw the U.S. B2B payments market reaching $23.1 trillion in 2020. And while the extraordinary circumstances we find ourselves in will likely impact the actual growth that takes place, there’s still a sense of bullishness among investors. Recently, for example, just four B2B fintechs were able to secure more than $181 million in funding — an impressive amount in any environment, but particularly so against the backdrop we find ourselves in.
Typically during times of drastic change, investment activity undergoes its own transformation. Investors will often dial back long-term or more risky bets as uncertainty threatens their return. However, while plenty of uncertainty abounds, some things have already been made abundantly clear as a result of the fallout from COVID-19. In the B2B space, this includes what will likely be a permanent shift towards digitization, a desire for contactless experiences, and a greater need for efficient and reliable cash flow. For investors, these things will serve as goalposts that mark a clear path towards opportunity. Investors know that great companies are born during economic uncertainty, and we can expect them to capitalize on this.
Another likely catalyst is the inevitable increase in M&A activity in the coming months as organizations look to form partnerships that build out their offerings in ways that help them keep pace with the rapid changes occurring. These new partnerships will be based on bringing innovation to market faster. And although there are discussions in Congress as to whether or not M&A activity should be halted, any such move is likely to impact big tech and B2C payments companies more than it would the B2B space.