Speedinvest Blog

Where to Start New Marketplace Businesses Today: 7 Picks from Investors and Entrepreneurs

June 19, 2023

In the ever-evolving startup landscape, marketplace business models continue to captivate investors and founders alike. With the potential to disrupt traditional industries and connect buyers and sellers in innovative ways, marketplaces always have and continue to offer vast opportunities for growth. 

During the past few years, we have seen an evolution of the marketplace model. Successful marketplaces evolved beyond simply connecting supply and demand to “Full-stack”-marketplaces with integrated SaaS, Logistic, or Financial-Services. And they emerged across different verticals, like Fintech, Food, Health, and Education. However, with this blog post, we want to shift our focus away from the advanced marketplaces that exist in different categories today. We want to explore where we still can find some untapped opportunities and room for new marketplaces. Asking the question of where to start a new marketplace business from scratch today.

During the last edition of our annual Marketplace Conference, this question was posed to experienced investors, like Luca Bocchio from Accel and Pete Flint from NFX, as well as marketplace entrepreneurs like Ion Sergis from Timberhub. Below, you'll find the video with their individual statements followed by a reflection on their insights that highlight the untapped potential in the marketplace business environment.

Picks from marketplace investors 

So, where would investors start a new marketplace business today? Having the unfair advantage of seeing dozens of marketplace businesses already at the idea stage, our five investor experts are targeting different industries and approaches to answer that question.

B2B marketplaces: Untapped potential in less digitized verticals

Luca Bocchio, Partner at the London office of Accel, advocates for the emergence of more B2B marketplaces. As the digitalization wave continues, several large addressable verticals in Europe remain untouched. According to Luca, sectors such as logistics, commodity trading, and wholesale for fast-moving goods offer ample room for disruption and growth. Entrepreneurs with a focus on B2B marketplaces in these verticals can pave the way for transformative change.

The potential inherent in establishing B2B marketplaces is further substantiated when analyzing VC funding data. The data reveals that B2B marketplace funding constitutes only a fifth of the investments in B2C marketplaces, indicating a significant untapped potential for B2B models. Moreover, B2B models exhibit even greater resilience during market downturns. When examining data from 2022, a year characterized by a challenging funding environment, B2B models demonstrated greater stability in terms of raised funding and enterprise value when compared to their B2C counterparts.

VC funding and Enterprise Value from marketplace businesses
VC funding and Enterprise Value from marketplace businesses

Empowering the “Little Guy or Girl”

Reflecting on the impact of past economic downturns, Pete Flint from NFX emphasizes the opportunity of helping individuals and small businesses thrive, or as Pete put it, “the little guy or girl.” Marketplaces that enable the little guy or girl to make money have historically flourished during challenging times. In 2001, eBay did very well by enabling people to sell assets that they didn't think were worth anything to make money. And going back to 2008 and 2009, models like Uber and Airbnb were taking off. By identifying highly fragmented areas and offering platforms that empower individuals and small businesses, aspiring entrepreneurs can create innovative solutions that drive economic growth.

The adoption of the approach of empowering smaller players is also reflected by analyzing the largest financing rounds in marketplace startups over the past year. One of them can be found in Brazil. Inventa, a digital marketplace supported by investors such as Tiger Global Management and Andreessen Horowitz, connects independent small and medium-sized retailers with suppliers, offering a streamlined purchasing process, personalized product recommendations based on transaction data, and credit options for retailers. At the same time, it’s an example that the "little guy or girl" can be empowered in the form of B2C as well as B2B models.

Disrupting Brokerages and Commissions

If Tara Reeves from Eurazeo was starting a new business right now, she would start a global prime brokerage. Tara envisions the emergence of a global prime brokerage that revolutionizes the trading industry by significantly reducing or eliminating trading commissions. Entrepreneurs with a vision to democratize financial markets and disrupt established players can explore this promising avenue.

Moreover, Tara's choice to focus on the fintech industry is strategically sound, as it continues to attract significant interest from investors. In fact, the fintech segment has emerged as the indisputable leader among marketplace verticals in terms of raised venture capital in 2022, with an impressive total of $17.8 billion.

Leading marketplace verticals by VC funding in 2022
Leading marketplace verticals by VC funding in 2022

However, the overall outlook for the Fintech segment is uncertain, with rising interest rates and a shift in investor sentiment, leading to a challenging funding environment. Fintechs are now facing pressure to utilize their funds wisely, prioritize profitability over growth at any cost, and build sustainable business models.

Innovations in Sustainable Industries

Carolina Brochado, Founding Partner and Deputy Head from EQT Growth, highlights the potential for marketplace businesses in sustainable industries. From addressing issues in food production and reducing food waste to the whole field of renewable energy, entrepreneurs can unlock value by solving critical problems. Though challenging, venturing into infrastructure-intensive sectors promises substantial impact and long-term sustainability.

According to Dealroom, funding for impact marketplaces totaled $1.2 billion in Q3 2022, less than half the record-breaking levels seen in 2021. However, the energy sector has been an exception, accounting for 16 percent ($31 billion) of the total value of impact marketplaces and receiving 50 percent of the venture capital funding of impact marketplaces in Q3 2022.

Identifying Clear Demand Pulls

Jeroen Arts, who built a marketplace to book on-demand work and meeting spaces before becoming an investor at Speedinvest, emphasizes the importance of starting a marketplace in a market with a clear demand pull. Instead of struggling to attract both buyers and sellers, entrepreneurs should focus on markets where demand already exists. Examples like quick commerce, where deliveries reach customers' homes within minutes, and effortless scooter rentals exemplify the success of aligning with existing demand.

An example of such a clear demand pull can be found when looking at Uber. This time specifically at their success in San Francisco. According to their CEO, Travis Kalanick, Uber had already surpassed the local taxi driver market in 2015. Meanwhile, the existing market of local taxi drivers served as an indicator of existing customer demand. Uber was able to tap into this latent demand, which had previously been underserved, and generate even more revenue with its approach. They were able to benefit from a clear demand pull without the need for heavy investment in acquisition.

Uber as an example of a clear demand pull

Picks from marketplace entrepreneurs

After gaining insights from seasoned investors, we sought opinions from experienced marketplace entrepreneurs who have built successful businesses themselves.

Niche Opportunities in the Resale Market

Merlin de Graaf exited her company to Vinted in June 2021. In her new role as a Strategy Director of Vinted, she observes the tremendous growth of the resale market and the emergence of niche players. As the market expands, unique categories gain prominence. Entrepreneurs can explore untapped niches, such as furniture or affordable jewelry. Merlin sees an especially attractive opportunity in the jewelry industry with a pricing range between €200 and €2000 untapped, where a trusted player is yet to establish a strong presence. Identifying further gaps in the market and delivering exceptional user experiences can lead to success in these specialized sectors.

Merlin’s pick of the resale market is further supported by Gen Z's preference for ethical consumption. A re-commerce market of more than $250 billion is projected by 2027. According to TechCrunch, this marks a 5x faster growth rate than the overall retail market.

Embracing Traditional Industries with Technology

Ion Sergis, the co-founder and CEO of Timberhub, advocates for revitalizing traditional industries with technology. Old-school sectors, like timber, concrete, steel, and gravel are ripe for innovation, because they still rely on outdated methods of communication and operations. By bridging the gap between technology and these industries, entrepreneurs can build trust, penetrate the market, and bring about transformative change.

At the same time, this area highly overlaps with the whole field of B2B marketplaces mentioned above. And the interplay of both is exciting to us on the Speedinvest Marketplace & Consumer Team. Tech startups like Timberhub (Timber), Schüttflix (Bulk Material), Harbor Labs (Marine), Mercanis (Service Procurement), and Yolda (Road Freight) are some examples of our recent investments in traditional and largely undigitized industries. Our very own Matthias Ockenfels and Maximililan Wilhelm shared their insights on how to kick-start building a B2B marketplace here.

Pitch your marketplace ideas

As the marketplace business model continues to evolve, there are numerous exciting opportunities for aspiring entrepreneurs to explore, whether in the realm of B2B marketplaces, empowering individuals and small businesses, disrupting traditional industries, or focusing on sustainability.

Do you want to evaluate a business idea in one of the mentioned fields? Or do you want to share an idea that is going beyond these areas? Please reach out to us. We are always happy to exchange ideas with you!

Join this year’s Marketplace Conference

And if you’re looking for further inspiration: This year’s edition of the Marketplace Conference is almost around the corner. Grab your seat now and exchange experiences in person with seasoned marketplace investors and entrepreneurs from around the world in Berlin.

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