Investing in Marketplaces

I often advise founders to target their investor outreach by researching what investors’ interests are. This only works if investors share where they’re focused on, and I realized it’s been a while since I’ve shared.

These days I’m focused to B2B + B2C marketplaces. In part because that’s what I know best as an operator, founder, and investor (I worked at Amazon 15 years ago and was on the team that launched the clothing category, I sold a startup I founded to RetailMeNot in 2014 — which at the time was the largest US marketplace for online coupons, and then I ran their mobile team for 2 years). This is also the area where I’ve seen the most success as an investor (e.g., Coinbase, Backlot Cars).

The data supports this renewed focus, as historically the largest venture outcomes have been tech marketplaces:

Since 2010, 50% of the top 10 IPO outcomes for VCs have been marketplaces and today five out of the world’s top 10 most valuable companies — Apple, Amazon, Alphabet, Microsoft and Meta — rely significantly on marketplace dynamics when it comes to their business model.

Within marketplaces there are 3 themes I’m curtrently leaning into:

1. Bringing Old Line Industries Online: Manufacturing, Construction, Transportation and Warehousing represent 18% of US GDP (source). These industries have lagged in technology adoption, but are now coming online thanks to generational shifts in their workforce. Example PGVC Deals: Backlot Cars, Machinery Partner
2. New Ways of Monetizing Skills & Time: The old 9 to 5 job ethos is being traded for “gigs” that offer flexibility, the ability to control your working time, and novel ways to monetize skills/passions. Example PGVC Deals: ShopThing, Cameo
3. Everyday Essentials: These are companies in high frequency purchase categories that appeal to the average american. Example PGVC Deals: Spothero, Yay Lunch

More to come on observations and the “why” behind these themes in subsequent posts. And if you’re building a marketplace startup at the seed or series A stage my DMs are open, I’d love to chat.