The 'Yelp for business software' raises $7 million to help corporate shoppers

Writing reviews about restaurants, coffee shops and hairdressers is a popular pastime that has become the foundation for websites like Yelp.

A startup called G2 Crowd is hoping the yen to pen reviews about specialized business software could prove equally compelling for writers and readers alike.

The company, which unofficially bills itself as the "Yelp for enterprise," has raised $7 million in a Series A round to further its quest of helping corporate shoppers find the right software to spend IT budgets on.

The startup's 2012 origins trace back to BigMachines, a sales software startup - later sold to Oracle in 2013 - where the five G2 Crowd founders all worked.

The old way

As part of the job, they'd have to work with software industry analysts, who would learn everything they could about BigMachines and spend months preparing a report recommending which software to purchase that they'd then present to their customers.

For those customers, these analyst reports were crucial, since business software decisions can easily get into the six figure range, if not higher.

The issue was that by the time those analyst reports got into customers' hands, they were already months out of date. Worse still, those reports only reflected whatever the analyst had managed to gather about BigMachines during their meetings - not actual customer experience with the software.

"They weren't doing a great service to the vendors or the buyers," says G2 Crowd founder and President Tim Handorf.

The result was that a lot of would-be buyers ended up going for "backdoor references," where they'd stealthily call up customers of the software they wanted to buy and get the straight dope on BigMachines.

At first, it was something that BigMachines was afraid of Handorf says. It went so far as to politely ban prospective customers from its annual user conferences, for fear that they'd hear something they wouldn't like.

But when BigMachines decided to be brave and open those doors, it found that these would-be customers appreciated the chance to have candid conversations with people who were actually using the software. It made them feel better-informed about their purchasing decisions, and it meant that BigMachines got more honest feedback.

"We had a good product. We had issues, but we felt comfortable our users loved us," Handorf says.

The combination of frustration with the software analyst industry and the understanding the people like hearing the good and the bad led those founders (including BigMachines founder Godard Abel) to jump ship and form their own company, circa 2012: G2 Crowd, a reviews site for business software.

It bills itself as the "Yelp for enterprise," helping businesses pick out which software they should drop their cash on by providing real, honest reviews from real, actual customers. It's gotten some good traction, with 37,000 reviews and 300,000 monthly visitors to the site.

Not like reviewing a Burger King

Obviously, there are some differences between a review for your local Burger King and, say, Salesforce's cloud-based marketing automation solution for small-to-midsize businesses.

"The context of buying a Whopper is a lot different from buying enterprise software," Handorf says.

To solve that problem, G2 Crowd's reviews process provides a little more guidance than your typical one-star, ranting Yelp review. Handorf says that a G2 Crowd review is "more like a survey," and asks guided questions around how they're using the software.

"You feel like you're really well informed" after reading a G2 Crowd review, Handorf says.

The reviews are free to read. G2 Crowd makes its money by providing more thorough reports, including trends and other more detailed analysis, to paying customers.

Because of its niche appeal, Waldorf says G2 Crowd may never be as well-read as something like Yelp, but it says it's dominating the competition with as many as 4 times the number of reviews on the site. It had previously raised $9 million in seed and angel investment.

This round was led by Pritzker Group Venture Capital with "significant participation" from existing investors Chicago Ventures, Hyde Park Venture Partners, Chairman Godard Abel, and G2 Crowd's own executives.