Software marketplace G2 Crowd acquires Siftery to fold software usage into its dataset

After raising $55 million in October at a $500 million valuation, business software marketplace G2Crowd is making its first-ever acquisition to bring more features to its platform. It is acquiring Siftery, a startup that has built its own database of business software not on user reviews, but by providing a service to businesses where it identifies what is actually getting used and when across their networks.

Terms of the deal are not being disclosed, G2 Crowd’s CEO and founder Godard Abel said in an interview. Siftery had been around for a couple of years and had raised a seed round of $4.1 million from a group of notable investors, including Founders Fund, Felicis and Venrock. All 20 employees, including co-founders CEO Vamshi Mokshagundam and CTO Ayan Barua, are joining G2 Crowd.

G2 Crowd has been building a name for itself as a place where IT buyers can discover and buy software and services for solving specific issues; and if they already are already using or considering a product, a place where they can read other’s reviews and compare it against competitors.

There are some 550,000 reviews on the site today across nearly 60,000 products in 1,200 categories (those reviews are up by 50,000 in the last two months). Around 2 million business professionals visit and use the site each month, which they may go to because they are repeat users, or because G2 Crowd happens to have a very strong SEO game, with its links turning up at the top of the list when you do a search for a specific product or product category.

That economy of scale makes G2 Crowd a pretty logical home for Siftery, which had also provided a database of software for businesses, but at a much smaller scale and before it had been truly commercialised. Abel said that the startup had only around 1,500 customers, with most of them on a free version of the product.

“They were just getting to the point where there was a fork in the road,” he added. “What they hadn’t done yet is monetise and build a business, and we are product people at G2 Crowd.”

This also seems to be the stated logic for Siftery, too. “We’re excited to join the G2Crowd team so we can more quickly realize our joint vision,” said Vamshi Mokshagundam, co-founder and CEO of Siftery, in a statement. “By becoming part of the G2 family, Siftery’s technology can reach millions more people, continue to develop rapidly, and have a bigger impact around the world in helping to eliminate wasted and inefficient software spend.”

Siftery’s additional functionality is interesting in terms of how G2 Crowd will develop going forward.

The smaller startup engaged with customers and their networks and provided insight into how much each product or service is actually getting used (not just enthused). That makes a handy way to determine whether money was being wasted on licenses for certain apps; or conversely whether companies are suffering from “shadow IT”: overpaying by not consolidating their purchasing and bargaining power. All that data subsequently also helped to provide insight to people searching its database to discover software.

The problem of overspending on software and apps happens to be a big one. G2 Crowd cites data from Netskope which estimates that the average enterprise now runs 1,246 cloud services, a figure that is growing over 10% each year. At the small business end, Siftery estimates that the average organization had 55 SaaS tools, more than doubling over the last three years.

And the challenge is still growing: across the range of company sizes, 35 percent more software gets trialled each year, with software budgets growing by 50 percent year-on-year for the past four. Some $1.4 trillion was spent on software and services last year, with waste in the UK and US collectively estimated at $34 billion, G2 Crowd said.

Abel said that for now the idea will be to keep Siftery’s product separate while it gets gradually integrated into G2 Crowd. There, it will potentially give the company another string in its bow in terms of the services it offers to businesses coming to its platform — and opting for paid usage tiers.

Interestingly, while G2 Crowd will likely continue to be popular as a marketplace to search for apps and services, this deal underscores how the company hopes to develop going forward. It has the opportunity to build a platform where organizations can manage their software, and potentially provide further tools to optimise how it is used, plan more deployments connected to it, and so on.

Abel has a long history building and selling startups focused around software productivity (most recently to Salesforce, but also to Oracle and before that CA), and that appears to be the direction he’s taking G2 Crowd, too. (Indeed, it seems to be part of a mini-wave of tech startups rethinking how businesses interact with software. Just earlier today, Nexthink out of Switzerland raised $85 million for its solution that helps enterprises monitor, triage and assist employees who encounter annoying software issues.)

Abel said that the engineering talent at Siftery was also a big attraction, and that could help shape other acquisitions going forward.

“I think we will look opportunistically,” he said. “It depends on finding a strong product and team.”