Market & Business
Marketplace Business
A platform that connects buyers and sellers, taking a percentage of each transaction as revenue.
Marketplace businesses aggregate supply and demand on a single platform, earning revenue through transaction fees (take rates). They exhibit network effects: more buyers attract more sellers and vice versa. Examples include Airbnb, Uber, and Etsy.
In Practice
The B2B marketplace connected manufacturers with distributors, charging a 5% take rate on transactions. At $200M in GMV, the company generated $10M in revenue with 70% gross margins.
Why It Matters
Marketplaces are attractive VC investments because they can achieve winner-take-all dynamics through network effects. But they face the cold start problem: getting both sides of the market simultaneously.
VC Beast Take
Marketplaces are the ultimate network effects play. The winner gets everything. Everyone else gets nothing. That's what makes them so exciting and so terrifying.
Related Concepts
Further Reading
How to Evaluate a Startup as an Angel Investor
A practical framework for assessing pre-seed and seed startups — covering team, market, traction, business model, and terms. Plus the red flags that experienced angels never ignore.
How to Break Into Venture Capital: A Realistic Guide
Forget the LinkedIn fantasy. Here are the actual paths people take to land VC roles—from operator-to-investor transitions to starting your own fund from scratch.
How to Build a Financial Model for Your Startup
A step-by-step guide to building a startup financial model that impresses investors, drives decision-making, and helps you forecast growth, burn rate, and runway.
Bootstrapping vs Venture Capital: Which Path Is Right for Your Startup?
A comprehensive comparison of bootstrapping and venture capital funding paths for startups, covering the tradeoffs in control, speed, equity, and long-term outcomes.
The VC Due Diligence Process: What to Expect
A founder's complete guide to the venture capital due diligence process — what investors examine, how long it takes, common red flags, and how to prepare your startup for scrutiny.
Series A Funding: What It Is and How to Raise It
Series A is where startups prove they can scale. Here's what investors expect, what metrics matter, and how to run a successful Series A process.
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