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

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

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.

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

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.

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

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. 

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.