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

We love asset-light or asset-less B2B marketplaces that use existing infrastructure and think building endpoints to access that infrastructure is the future.

Consumer marketplaces thrive on high frequency, and B2B marketplaces need tons of volume. 

Another way to think about [expanding a company into an adjacent market] is, will this new offering contribute back to your growth function. Let's say that for a marketplace, growth is a function of GMV, take rate, frequency of orders, size of orders, AOV, all that stuff. The new product offering should have a neutral to positive impact on those va... See more

If demand can only buy more from the supply side once they sell the goods because of balance sheet limitations, then payment terms are really important.

The other thing that we’re seeing is that there are so many agents and aggregators up and down the stack in many industries. These represent opportunities for integrated software solutions to streamline the process. We think about how these low-value brokers and inefficient workflows can be replaced by machine-to-machine transactions. The value acc... See more

Since we’re seed investors, we’re looking for markets where significant dollars are flowing between businesses. These are often older, more established buying patterns where the innovation is launching the marketplace itself.

We've learned over the years that B2B marketplaces are poorly positioned to own customer support on behalf of supply and demand, given the complexity of what follows a transaction.

The more complex and fragmented the market, the more likely you will have these many-to-many relationships, which get harder to manage without a software layer.

We believe the future of B2B marketplaces starts with vertical SaaS solutions. These initially look like software-enabled workflows that streamline operational inefficiencies between supply and demand, making online transactions possible where previously they may not have been. 

When considering building a marketplace, there are many decisions you have to make upfront, particularly whether they want to own the infrastructure or partner with the best-in-class partner or provider. For example, if you were starting a marketplace four or five years ago, you probably were building a lot of this stuff yourself. But suppose I’m b... See more