What B2B, B2C, and B2G actually mean
B2B (business-to-business) means you sell to other companies — the buyer is a purchasing process, not an individual, and the sale usually clears a budget and a decision-maker before it closes. B2C (business-to-consumer) means you sell directly to individuals, who decide with their own money and far less process. B2G (business-to-government) means your customer is a public institution, and the purchase runs through procurement rules that exist independent of how much anyone wants your product.
These aren't just labels for who signs the contract. They set the physics of your sales motion — how long a deal takes, how big it is, how it churns, and how much cash you burn while you wait for it to close. Pick the label and you've picked most of the answer to "how should this company grow?" before you've written a single line of the product.
Why this is the first decision, not a footnote
In Founder Runway, business model is one of three choices you make before the first scenario ever appears, alongside starting stage (Pre-Seed, Seed, Pre-Series A, or Series A) and difficulty. That opening screen isn't flavor text: it sets your starting cash, shapes how burn behaves over the run, and determines which of the four options you'll see at each decision. A run built around B2G plays nothing like a run built around B2C, even with identical starting cash.
Real companies make this choice with less ceremony but the same consequences. Founders often default to whichever model matches the idea that excited them, without pricing in that the model — more than the product — decides how much runway they'll need and how fast they'll find out whether they're right.
B2C: cheap experiments, fragile retention
B2C gives you the fastest, noisiest signal in startups. You can ship a landing page, run a small ad budget, and know within days whether anyone cares — cycles measured in individual decisions, not committee timelines. That speed is the model's whole appeal: cheap to test, cheap to be wrong, fast to iterate.
The cost shows up on the other side of the funnel. Individual consumers churn easily and switch for small reasons — a clunkier onboarding flow, a competitor's cheaper price, simple forgetting. A strong month of signups can hide a leaky bottom, so the real read on a B2C business is never the growth number alone; it's whether each new cohort's retention curve sits above the last one's, even if the absolute number is still low.
B2B: slower cycles, fewer and bigger bets
B2B inverts the trade. A deal takes longer to close — you're usually convincing more than one person, and budget cycles set the pace regardless of how ready the buyer feels. But once it closes, it tends to stay closed: contracts, integration switching costs, and a real onboarding relationship make B2B revenue far stickier than a consumer subscription.
The risk moves from "will anyone stay" to "what happens if one leaves." A handful of large customers concentrates revenue, so losing one enterprise account can do more damage to MRR than losing a hundred consumer subscribers — and a big logo's requests have a way of quietly becoming your roadmap if you let them.
B2G: the longest cycle, the biggest moat
B2G is the extreme version of B2B's trade-off. Public institutions can be the most durable, defensible customers a startup ever wins — high-volume, reputable, and slow to leave once they've committed. But the road there runs through procurement procedure, multi-party approval, and pilots that can eat months before a single invoice is issued.
The founder mistake in B2G isn't losing the deal — it's winning it too late to matter. Cash keeps burning through every meeting, demo, and unpaid pilot while the institution's process runs at its own pace. Picking B2G isn't really planning around the deal; it's planning around whether the company survives long enough for the deal to close, which is exactly the trade-off our dedicated guide on B2G sales cycles walks through in detail.
B2B vs. B2C vs. B2G at a glance
Line the three up side by side and the pattern is consistent: speed and cost trade against size and durability. B2C is the cheapest, fastest way to learn whether anyone wants what you're building. B2G is the slowest and most expensive way in, but it buys the strongest moat once you're through the door. B2B sits in between, and most of what people call "go-to-market strategy" is really just choosing where on this spectrum to place a bet.
B2C
Fastest signal, cheapest tests — retention is the real scoreboard, not signups
B2B
Slower cycles, fewer customers — each one bigger, stickier, and more concentrated
B2G
Longest cycle, strongest moat — cash has to survive the wait for the first invoice
How to choose your first business model
There's no universally correct answer, but there's a useful set of questions. How much runway can you actually survive on while a sales cycle plays out — weeks for B2C, months for B2B, potentially a full cash cushion's worth for B2G? Do you need a fast, cheap read on demand before you're confident in the idea, which points toward B2C? Or do you already have a strong point of view about who has budget and needs to buy relatively quickly, which points toward B2B?
Stage interacts with model more than founders expect. A Pre-Seed company choosing B2G is one of the riskiest combinations there is, in the game and in reality — you're pairing the thinnest cash cushion with the longest wait for revenue. A company with a Series A cushion can afford that wait; a Pre-Seed team usually can't. If your model doesn't match your stage's patience, that mismatch is where most runs — and most companies — actually fail.
Practice the choice before it costs you real runway
In real life you can shift go-to-market strategy over time — start B2C to find signal, then move upmarket to B2B once you understand who's actually willing to pay. In a Founder Runway run the model is locked in at turn zero, which is exactly what makes it a useful rehearsal: you feel the full consequence of a choice you'd otherwise get to soften over several quarters.
Frequently asked questions
What's the difference between B2B, B2C, and B2G business models?
B2B means you sell to other companies, where a purchasing process and a budget decide the outcome. B2C means you sell directly to individual consumers, who decide with their own money and far less process. B2G means your customer is a public institution, so the sale runs through procurement rules and multi-party approval. Each one sets a different sales cycle length, deal size, and churn pattern.
Which business model has the shortest sales cycle?
B2C, by a wide margin. A consumer can decide to try or buy your product in minutes, so B2C startups get demand signal faster and cheaper than B2B or B2G — the trade-off is that consumer decisions reverse just as quickly, which shows up as higher churn.
Why does B2G take so long to close deals?
Public-sector buyers rarely have one decision-maker — needs definition, technical review, budget approval, and procurement procedure each add their own timeline before a contract is signed. Pilots without a payment date or clear success criteria can stretch this further. The result is a sales cycle that can run for many months while a startup keeps burning cash.
Can I change my business model mid-run in Founder Runway?
No — business model is chosen once, before the first scenario, alongside starting stage and difficulty, and it stays fixed for the rest of that run. That's intentional: it forces you to feel the full consequence of the choice instead of quietly correcting it later, the way real companies sometimes drift between models without ever deciding to.
Which business model is best for a first-time founder?
There's no universal answer, but B2C is usually the cheapest place to learn: fast, low-cost signal makes early mistakes cheap to see and correct. B2B rewards founders who already have a strong hypothesis about who has budget. B2G is rarely the right first bet — its long, expensive sales cycle punishes exactly the thin cash cushion most first-time founders start with.
Does business model affect how much starting cash I need?
Yes. A B2G-focused company needs enough cash to survive procurement, pilots, and approval before the first invoice clears — often the longest wait of the three models. B2C and B2B businesses can usually operate with a thinner margin of safety, because revenue, when it arrives, arrives faster after the sales conversation starts.
Is B2B or B2C more capital-efficient?
It depends what you're optimizing for. B2C can be more capital-efficient per experiment, since testing demand is cheap, but often needs more total spend to overcome high churn at scale. B2B usually needs more capital per deal to fund a longer sales cycle, but each closed customer is worth more and churns less, so the capital tends to compound rather than leak.
Test this decision in the game.
Apply the same assumption across one run; which metric burned three turns later?