What Founders Need to Know About Marketplaces: An Interview With Luca Bocchio
Luca Bocchio joined Accel in 2018 where he now serves as a Partner. His interest and passion for marketplace businesses started early on in his investment career, which now includes innumerable marketplace investments, such as brumbrum, Deliveroo, Flixbus,GetYourGuide, sennder, Secret Escapes, Vinted, and Wallapop.
More recently, Luca has been focusing his attention on the exciting opportunities within B2B marketplaces. This resulted in him leading Accel’s investment in Qogita, the B2B platform on a mission to revolutionize global wholesale through technology.
Luca, together with his colleague Varun Purandare, will be hosting a panel at The Marketplace Conference in Berlin on October 11th where they will talk about the five key things early-stage founders should focus on in B2B Marketplaces during a session of the same name. Leading up to the conference, I sat down with Luca to talk about the different waves of marketplace companies, his recent investment in Qogita, and the huge opportunities in B2B Marketplaces.
An interesting discussion on that including top tips for marketplace investors and so much more in our chat below.
What are the biggest opportunities you see in the market and within Marketplaces today?
E-commerce, by virtue of the B2C online store, is now the backbone of our economy in the digital age, worth an estimated $4.9 trillion annually. B2B online spend is far ahead of B2C online spend today and there’s still a huge opportunity for B2B Marketplaces and stores, which enable companies to connect with other organizations and conduct business all in one place, online.
Startups like Qogita are offering wholesale platforms that allow brands of any size to quickly and easily manage their inventory and purchase from other companies in bulk for the first time. By connecting the ultimate buyer to the ultimate sender––and cutting out the middleman––such platforms are set to radically simplify and improve B2B commerce and supply chains, allowing any business to go global from day one. Such platforms are set to become the trading vehicle of choice for sellers big and small in the near future.
What should founders know about the latest wave of marketplaces?
There have been a few waves of marketplace companies. The first generation was all about providing consumers with information and connecting them to third parties through classification and listing-style services.
The new wave of marketplaces that followed really interested me as they realized that the digital consumer expects more: greater knowledge and choice, reliability of product and service, accurate personalisation and transparency. Rather than just providing faster access to a product or service, companies need to enhance it. It’s about adding more value and better services for the customer.
Taking the data-driven and customer-centric approach characteristic of e-commerce and applying it to out-dated industries can be a catalyst to radically enhance trust, transparency and quality. There's a huge opportunity still ahead.
From your portfolio, what is the one marketplace business you are most excited about?
There are many businesses in our portfolio that I’m excited about, but one of our most recent investments in the space is Qogita, a leading global wholesale B2B platform.
There’s a huge B2B wholesale market in Europe, which is fragmented and complex and the trade is done in an inefficient, undigitized way. Qogita has the opportunity to become the digital enabler of the whole value chain, bringing more efficiency and transparency in a notoriously grey market.
Vinted is also a special company and a rare consumer marketplace success story. Since its founding, the company has scaled to operate in 16 countries, built a community of more than 65 million members, and remains true to its original vision.
What is the one piece of advice you would give to Marketplace founders who are trying to solve the classic chicken-and-egg problem?
It’s very hard to give a unique recipe to founders that are building different marketplace models, but probably the most important advice that holds true for 99 percent of them is to focus on the supply-side first. Defining a clear value proposition and enhancing liquidity for your suppliers is crucial. Many companies make the mistake of focusing on balancing demand and supply too soon. This results in more difficulties in scaling supply later on.
What are the main criteria and KPIs you review at Accel to evaluate a Marketplace business?
There are a number of things we consider, but one of the most important criteria for any business evaluation––not just marketplaces––is the team. We look for founders who have deep domain knowledge and the ability to build trust with partners.
Two other key things we assess are whether there is a large enough market that would benefit from digitization and access as well as a frictionless product / offering that enables easy sign-up on both sides.
People say venture capitalists often suffer from ADHD. In your career, you’ve looked at and invested in countless marketplaces across a variety of sectors. How are you able to maintain a flexible mind and the ability to switch from sector to sector?
Partnering with entrepreneurs early means we have to have conviction in them, their ideas, and a deep understanding of the industry they’re in. When it comes to investing, we have a thesis-based approach called “Prepared Mind” from the Louis Pasteur quote “Chance only favors the prepared mind” and it’s integral to how we approach, learn about, and invest in new opportunities.
Prepared Minds involve our team honing in on specific categories and industries, being proactive, talking to our network, researching the trends shaping tomorrow’s world, finding the category leader, and then moving fast for the right reasons. Our Prepared Minds ensure that, by the time we invest, we share the same commitment and conviction as our entrepreneurs.
Without spoiling the topic of your panel too much, what is the one piece of advice you would give me as a marketplace investor?
Always focus first on a deep understanding of the market and value chain dynamics of the categories / verticals you’re spending time on.
The vast majority of successful and durable marketplaces have mastered their business model by redesigning their respective value chains and market dynamics. Understanding how and why that can happen takes time!
Marketplace Conference 2022
Want to hear more from Luca on how to build a B2B Marketplace? Join us at The Marketplace Conference and come and listen to her panel on ‘5 Key things early stage founders should focus on in B2B Marketplaces' LIVE in Berlin on October 11th at 16:00 CET on the Main Stage.