Using B2B data to track tech adoption – A guide for investment managers

As professional investors seek more information about the internal workings of companies they invest in and the likelihood of their success, the market for business-to-business data – also known as B2B data – is growing.

Simply put, B2B data helps users better understand the dynamics of a certain company or industry by assessing how successfully its products or services are being adopted by other businesses.

B2B data can be found across many of Neudata’s different alternative data categories, including transactional data, crowdsourced data, surveys/polls data and web-/app-tracking data.

The reason? B2B data can take many forms and has multiple applications, as we will discover in this article.

B2B data vendors will provide this type of information to a range of organisations, including corporations trying to understand the inner workings of their own company or conducting competitive industry research.

It has immense value in the investment world, too, with buyers including hedge funds looking to this type of data to understand company performance or industry dynamics.

Read on to discover the value B2B data can add. This article will cover:

• What is B2B data?
• What are the different types of B2B data?
• How is B2B data collected?
• The investment case: Tech sector
• How can Neudata help?

What is B2B data?

B2B data is big business – a quick search on the Neudata platform yields almost 300 results for individual dataset research reports.

But how can we best understand it?

To give one example, Neudata hosts research on a data seller that offers crowdsourced B2B software reviews and buyer intent data. It provides unique insights into the decision-making process of business buyers in that sector – the corporate equivalent of an Amazon review page, which shows how consumers rate products.

But the market for business buyers is much larger, often more lucrative and always more private than the consumer market, making B2B data much more valuable… and harder to obtain.

Another example of a data seller highlighted on Neudata’s platform is an invoicing processing company. The company monetises its data by selling access to aggregated invoice information, providing insight into transaction-level B2B spending of thousands of businesses.

What are the different types of B2B data?

Before we get into the weeds, let’s take a step back and explore the different types of B2B data.

B2B data can be internal – collected by companies themselves – or external, where third parties harvest it. Because data collection and storage is an arduous and expensive process, an ecosystem of data sellers has grown on the Neudata platform to service the market opportunity.

Many vendors that sell B2B data tend to either own the underlying data themselves or have exclusive partnerships with the data owner to analyse and repackage the data into a useful intelligence product.

However, other vendors are able to draw intelligence about companies from publicly available data, including job listings, press releases, website traffic data, tech stacks and more. Still others conduct their own research, including through surveys of practitioners and other crowdsourced information. If the underlying data is public, the vendor is likely to have a very sophisticated skillset and team, combined with a commercially protected business model.

Because this type of data can provide very valuable insights into the purchasing decisions, hiring activity, etc. of major corporations and is harder to collect, vendors typically charge high prices to access their B2B datasets.

There are multiple types of B2B data. Here are three areas commonly explored by investors:

Purchase intent data provides early indicators into the types of B2B products that companies are interested in buying. It tracks service providers that are likely to sell more or less to other companies.

Often gathered through tracking clickstream/browsing activity data from company IP addresses and other sources, as well as from survey data/analysis of reviews, purchase intent data is very applicable to software use cases. A lot of industry specialists and investors are keen to know which service providers the likes of Apple and Amazon are buying.

However, purchase intent data is often messy and unreliable, since intent to buy doesn't ensure a purchase will happen. Users can pair this data with software installs/spend data to ensure they get an accurate picture.

Supply chain spending/B2B transactional data shows what companies are actually spending money on.

Transactional-level B2B spend information is gathered through analysing B2B invoices, e-receipts, bills of lading and other sources – and a big market exists for this information too.

Human capital data gives a steer on when companies are struggling to hire or losing people or scaling up – the kind of information which helps investors understand the overall health of a company.

This information is more likely to be sourced from public information, like web-scraped job listings, etc.

How is B2B data collected?

In the introduction we mentioned a dataset that gathers information from crowdsourcing – a common technique in the near-300 sets listed on the Neudata platform.

One featured data seller crowdsources data on almost $1.9 trillion in annual B2B transactions, based on those companies’ accounts receivable data, then draws insights from it.

Web-scraping is another technique that’s also commonly used. The same company scrapes information from public records to offer structured data on:

• company firmographics (from sales volume to employee headcount);
• profiles on more than 13 million executives;
• financial health metrics (from records including corporation filings and bankruptcy notices); and
• financial risk scores on creditworthiness and payment timeliness.

Online exchanges. One Neudata-listed vendor operates a portal connecting buyers and sellers in a certain industry, and produces a daily B2B web activity dataset on the back of it, providing insights into buyer activity and intent.

Surveys. IT professionals, for instance, could be surveyed about their technology adoption to yield insights.

The investment case: tech sector

B2B data could, in theory, have relevance for any sector. But, in practice, alternative data has most B2B applications and is most widely available for tracking the technology sector.

Why is this? Well, technology is a key spending area for almost all companies in the twenty-first century. The range of choice, combined with rapid pace of change and innovation, means there is high demand for insight into which software and tech services companies are gaining more customers.

And as generative AI rises up the agenda, that trend is unlikely to change.

A key example is the field of software-as-a-service, or SaaS, the multi-billion-dollar market for web-hosted software. It is regarded as a core technology, both within and beyond the tech sector.

There are many B2B data use cases in the SaaS field. For instance, data on B2B IT installs and spending data can help users understand how firms are using SaaS technology.

Transaction volumes in the B2B subscription market, sometimes gleaned using metadata to estimate the volume of transactions being processed across a company's servers, give another measure of uptake. This type of data offers similar metrics to consumer transactional datasets like e-receipt and card panels.

There is a key user group for this data: money managers and other investors.

The fact that B2B data is important in tech investing just reflects the state of the equity markets: consider how much of the post-2008 rise in stocks was driven by Apple, Google and other technology firms.

Apple’s market cap is now bigger than the UK stock market.

The kind of insights to be yielded by the B2B data we have mentioned are pored over by research teams in Wall Street, London and other financial centres to better understand industries and hone their investments.

Hedge funds use the information to work out which companies are on the up, and they should invest in – and also which might be heading downhill versus peers, so they can bet against them.

Private equity investors have long used B2B IT installs data to see which firms are subscribing to particular software products. Many software firms use this data to track competitors and drive sales strategies. Similarly, it could prove a valuable source for software portfolio companies.

Recently, an increasing number of PE investors have started leveraging alternative data for their portfolios. Software review data is increasingly adopted.

How can Neudata help?

Neudata is an alternative data-focused research platform that specialises in the objective and neutral assessment of data vendors and datasets. We help institutional investors, corporations and leading global organisations find the most relevant alternative data sources to use in their internal data ingestion processes.

Our platform is the global authoritative source for unbiased, independent alternative data intelligence.

We don’t buy or sell data, or require data providers to pay us a revenue-share or commission in exchange for recommending their products to data buyers. That means you get unbiased intelligence that’s tailored to your specific research goals and strategies.

Since 2016, we have helped our clients understand the landscape of available datasets, increasing the efficiency of their data spending budgets. Neudata’s data buyer clients represent 60-70% of industry-wide spending on alternative data.

If you are a data provider/owner and want advice on how you can sell/monetise your data, or if you’re a potential buyer looking for an introduction to the alternative data landscape, contact info@neudata.co to discover how Neudata can help.