Ameet Shah, partner at Golden Ventures, on the economics of vertical SaaS marketplaces

• What was the aha moment for Scott with crypto?
  
  
  • Scott was aware of crypto early, but very skeptical. Saw that everyone was trying to decentralize just for the sake of it. But decentralization has costs. Centralized entities are often more effective in coordinating interaction.
  
  
  • His opinion started to change with examples of use-cases where tech was

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This is because marketplaces are not a race to growing GMV, they are a race to creating the most value for both the supply and demand side (liquidity). When you start in a small, focused market, it’s a lot easier to build liquidity and get to a meaningful percentage of that market, becoming the best place for both the supply and demand to go.

We believe that new and upcoming B2B players now have the tools to overcome historical constraints, and that large B2B commerce aggregators will emerge over the next decade. Further, given the complexity of B2B transactions and the different vertical requirements (think aerospace vs. chemicals vs. apparel vs. food), we think vertical marketplaces c... See more

Vertical markets are particularly good candidates for a SaaS+fintech business model. While customers in horizontal markets often try different software vendors, resulting in multiple winners in a market segment, customers in vertical markets prefer purpose-built software for their specific industry and use cases.

Vertical service marketplaces can optimize around one or a few adjacent verticals, but the low frequency of most verticals (other than cleaning and lawn care) creates challenges.