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.

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.

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 look at [the taxonomy of B2B marketplaces] in a couple of different ways. High-level, there are aggregators, managed marketplaces, channel marketplaces, vertical SaaS-enabled marketplaces, and then tech-enabled brokerages.

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

My personal favorite are these vertical SaaS marketplaces. They start as vertical SaaS software, then layer in a marketplace later on. Usually, it begins with a software solution that is focused on a highly technical business problem. For example, a software provider may give away or charge a very low fee for something that has high intrinsic ... See more

I do think that bringing the marketplace functionality too early can be a burden on the company, especially one that's not capitalized well... offer something with high intrinsic value and low marginal cost, start getting customers hooked into that workflow, and then expand into other parts of the workflow that leave you well-positioned to launch a... See more

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.

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