15 Marketplace Startups That Have Raised Over $50 Million

I’m fascinated by online marketplaces.

One of the interesting things about them is their inherent network effects. They’re hard to get going (not least because of the chicken-and-egg problem) but — if successful — can become very valuable as it’s hard for other businesses to compete.

As a result of this defensibility, online marketplaces have been popular with VCs.

Here are 15 marketplace startups across a wide range of verticals that have each raised over $50 million. (I’m betting there are more than a couple you don’t know.)

1. Tokopedia

Tokopedia logo

Indonesia’s answer to Amazon and Alibaba, Tokopedia is an ecommerce marketplace that helps brands and small businesses sell to consumers. They’ve received a total of over $1.3 billion in funding, including backing from Alibaba.

2. Mercari

Mercari logo

Mercari is a mobile peer-to-peer marketplace helping people buy and sell used goods. The service was launched and grew rapidly in Japan and has since expanded to the US and UK. The company has raised over $116 million in funding.

3. Paddle8

Paddle8 logo

Paddle8 is an auction-based marketplace for buying and selling art. It was founded in 2011 and has received $51 million in funding.

4. JobAndTalent

JobAndTalent logo

Jobandtalent is a job marketplace from Spain which now serves a number of countries, mainly across Europe. It has raised over $85 million.

5. ezCater

ezCater is a marketplace making it easy to order office catering from nearby restaurants. It has raised over $69 million in funding.

6. Tradesy

Tradesy logo

Tradesy lets people buy and sell new and preowned designer fashion and accessories and raised $74.5 million.

7. VivaReal

VivaReal is an online real estate marketplace in Brazil. According to Crunchbase it has raised over $74 million.

8. Managed by Q

Managed by Q is a platform for office management that acts as a marketplace between office occupants and service providers such as cleaners and handymen. The company was founded in 2013 and has raised over $72 million.

9. Shyp

Shyp connects businesses and consumers with shipping carriers. Founded in 2013, they’ve raised just over $62 million.

10. Lyst

Lyst is a London-based fashion marketplace and aggregator which lets consumers shop from a large range of stores, all in one place. They’ve raised $60 million in funding.

11. LendInvest

Another London-based business, LendInvest is a marketplace for property finance for property professionals. They’ve raised over $59 million in funding.

12. Science Exchange

Science Exchange is a marketplace for scientific research where you can order outsourced research and development services from thousands of qualified service providers. The company has raised $58 million in funding.

13. HomeLight

Homelight logo

HomeLight is a marketplace connecting home sellers to estate agents, using reviews and sale price data to help home owners find the best agents in their area. They’ve raised a total of $55 million.

14. Apartment List

Apartment List logo

Apartment List is an apartment rental marketplace based in San Francisco. It has raised $59 million in funding.

15. Policygenius

Policygenius is an insurance comparison service (effectively a marketplace connecting consumers with insurance providers). Founded in 2014 and based in New York, the company has raised $51 million.



How to Use Scarcity to Hack the Marketplace Chicken-and-Egg Problem

Solving the chicken-and-egg problem is a key one for any marketplace business.

Here’s one hack that uses scarcity to help with solving it.

What is the marketplace chicken-and-egg problem?

When you’re starting a marketplace, you typically have no customers and no suppliers.

With no customers, it’s hard to get suppliers on board. And, having no suppliers, any customers who come to your marketplace will be disappointed and unlikely to return.

This problem applies when getting the overall marketplace started but can also apply on a city-by-city basis for marketplaces relying on local supply and demand — having your marketplace up and running well in London may not help much when you try to launch in Manchester.

How can you get round it?

Many marketplaces never reach the sustained level of ‘liquidity’ they need to break past the chicken-and-egg problem.

At this stage you typically need to get creative and do things that don’t scale.

One hack that can help is to create scarcity and then use that scarcity to persuade hesitant suppliers to come on board.

Restaurant food delivery service Seamless (initially SeamlessWeb) used this tactic to solve the chicken-and-egg problem for their service. Here’s how…

How Seamless used scarcity to bring suppliers on board

Seamless was founded in 1999 and aimed to connect hungry people with restaurants who could delivery food to them.

Jason Finger, their founder, started with the demand side by going to big investment banks and law firms in New York City. He’d tell them he was creating a new delivery service and asked if they were interested in using it for their staff.

With interest from these big firms, he’d then to go restaurants in each niche (e.g. Thai restaurants) and tell them they were only going to onboard two restaurants in that niche and they’d be going to their competitors next. This got the restaurant owners’ attention and allowed him to get a selection of restaurants onto his platform.

From there, Jason could more easily get further corporates interested which represented more demand for restaurant owners and hence made the marketplace more appealing to them. Jason had started the SeamlessWeb flywheel spinning.

After a relatively slow start, Seamless went on to raise $50 million in funding in 2011 and was reportedly on track to generate over $100 million in annual revenue before merging with Grubhub in 2013.

How can you use these ideas for your marketplace?

There are really two key tactics here that you can borrow from Seamless:

  1. Tap into hubs of demand. Seamless identified large pools of attractive demand (large banking and law firms) and, by targeting them, efficiently established a base of significant demand they could tap into once they had suppliers in place.
  2. Create artificial scarcity to persuade suppliers. Seamless got suppliers on board by offering access to the potential demand from the large corporates then sealed the deal with scarcity they created by limiting access to their platform to just a couple of restaurants for each type of food.

These are powerful tactics that can be applied by many marketplaces, particularly in the early stages.

First, look for ‘demand hubs’ — places that aggregate potential demand for the product or service your marketplace will be offering. See if you can work with these hubs to bring people to your marketplace when you have suppliers in place.

Next, look for a way to create scarcity on your platform when approaching potential suppliers. Perhaps, like Seamless, you’ll limit listings to a small number of suppliers in each category. Use this scarcity to persuade suppliers to come on board.

Where have you spotted these tactics in use by other marketplaces? Do let me know in the comments. I’d love to hear from you.

Further Reading

How Started a Fast-Growing Careers Marketplace

How Started a Fast-Growing Careers Marketplace

If you’re interested in how to start a successful marketplace, Matt Mickiewicz is a man to study.

Matt has previously started two successful marketplaces: Flippa and 99designs.

His latest business,, is a job marketplace which — after just three years — is doing tens of millions of dollars in annual sales and has raised over $70 million in funding.

Matt was recently interviewed by Andrew Warner of Mixergy (transcript here) about how was started. As usual, Andrew dug down to some great details.

If you’re building a marketplace, there’s plenty to learn from.

Here’s a summary of the main points:

Phase 1: Idea and Minimum Viable Product (MVP)

1.1 Identified a Big Pain Point

Over dinner after a conference on April 27th 2012, Matt got talking with a couple of other successful entrepreneurs about a problem that they and many of their friends were frustrated by: not being able to find good people to hire.

Existing ways of addressing this problem were:

  1. very expensive, and
  2. not working well.

They knocked around some ideas for a marketplace to help match the best candidates with the best companies.

One of the guys (a CTO) offered to build it, saying it would be worth it if it helped him find even one software engineer for the company he had at the time.

1.2 Built the Initial Tech Platform

Matt created some wireframes, landing pages, ad copy, emails, etc. and the CTO guy built it. The first version was at

Phase 2: First Users

2.1 Focussed Tightly Early On

To get liquidity in their early stages, Hired focussed their efforts in three ways:

  1. Geography: They concentrated on a specific geographic area (the San Francisco Bay Area).
  2. Supply-side: They only accepted candidates from five or six Silicon Valley companies (Google, Facebook, Twitter, and others) with a reputation for hiring good engineers.
  3. Demand-side: They only allowed VC-backed Silicon Valley companies to make job offers.

This focus increased the chances of any pair of candidate and potential employer on the platform being interested in one another. So with relatively few candidates and employers, they could still start getting ‘matches’.

2.2 Used Email to Get Initial Candidates (With Lure of ‘Finding Out How Much They Were Worth’)

To get candidates onto the platform, Matt and his co-founders emailed engineers at their target candidate pool companies inviting them to

“find out how much you are worth”


“have companies trying to hire you with transparency up-front.”

This was a novel pitch to the engineers (who were used to being bombarded with requests from recruiters) and Matt feels it was an important reason why it caught their attention and encouraged the engineers to sign up.

Through these emails, the Hired founders got 88 engineers to create profiles on the platform.

2.3 Used Email to Get Initial Hiring Companies (But Had to go Via Investors)

Approach 1: Emailed Potential Hiring Companies Directly

With profiles of 88 potentially highly sought-after candidates in hand, Matt and his partners then emailed target hiring companies with the following pitch:

“We have 88 engineers who are interested in new job opportunities. Would you be interested in using our platform to interview the people that you’re interested in? There’s no cost up front. We’re not asking you for a credit card, no contract to sign. You don’t have to talk to us if you don’t want to. We’ll only charge you a success fee when somebody gets hired.”

They expected a good response. After all, these companies were keen to hire software engineers.

But the approach didn’t work.

Matt thinks the problem was that they didn’t have any credibility at that stage, and so came off as being like the many other recruitment services that were pitching these companies at the time.

Approach 2: Contacted Hiring Companies via Investors

The Hired team then tried a new approach: they reached out to the investors they knew and asked them to tell their portfolio companies about the new service.

This did work.

Some of the investors contacted their portfolio companies about the new platform and some of those portfolio companies started using the platform.

Phase 3: Growth

3.1 Developed an Innovative, Differentiated Solution differentiated themselves from existing alternatives in a key way which helped to improve the experience for candidates:

  • They provided upfront transparency to candidates about the compensation they could receive if hired.

This differentiation helped them get attention when contacting people directly and also helped them get a TechCrunch article which generated a lot of interest in the service early on (resulting in around 5,000 developers and hundreds of employers signing up to the service).

3.2 Boosted Liquidity by Introducing Urgency

From early on, Hired started presenting batches of candidates to hiring companies for limited two week periods. This had two benefits:

  1. it gave prospective employers a reason to take action and
  2. it meant that strong candidates could end up with multiple offers on the table at the same time, allowing them to compare those offers better.

3.3 Invested in their Brand

At a stage when they had $2.7 million in seed funding, the team spent $10k to $20k on a branding/naming consultancy and around $125,000 on the domain name

3.4 Focussed on Candidates

Despite their initial challenge with getting employers on board, the team viewed candidates as being the hardest side of the marketplace to get in place.

With this in mind, for the first 3 years, Hired focused almost all their resources on attracting and improving the experience for candidates (knowing that with the right candidates, prospective employers would follow).

This included building a team of ‘talent advocates’ to help candidates through the recruitment process. These are people with high EQ who are incentivised around Net Promoter Score, not recruitment commission. are only now looking at ways to directly boost the employer side of their marketplace as well.

3.5 Used Feedback, Experimentation and Data to Improve Process

From the very beginning, Hired have continually been working to improve the recruitment process:

  • They talk to lots of customers and run user research feedback sessions.
  • They continue to test new approaches, some which work, some which don’t.
  • They are very data-driven with a data team and business intelligence infrastructure, with data available to the entire company.

This has led to them dramatically reducing the end-to-end time it takes for someone to be recruited.


Hired is a marketplace that has been hugely successful in a short space of time. Key factors in their success so far have been:

  • Identified a very severe and common pain point.
  • Focussed tightly to get initial liquidity.
  • Raised lots of capital to double down on the opportunity (but only after proving the concept, and the founders’ track records presumably helped).
  • Focussed resources on building the most in-demand side of the marketplace (great candidates), which attracted the other side (hiring companies) for free.

Further Reading

If you’re interested in this kind of thing, do have a read of the transcript of the interview here.

Some other articles that you may like:


7 Frameworks For Predicting Online Marketplace Success

7 Frameworks for Predicting Online Marketplace Success

What makes some online marketplaces billion dollar successes and others costly failures?

Uber and Airbnb are forging ahead relentlessly. Yet Homejoy, having raised $40 million in funding, ended up shutting down.


How much is down to execution and luck, and how much to fundamental differences between the industries they chose to play in or their precise business models?

What if there was a framework that could help us predict whether an online marketplace would be successful or not in a given industry?

line drawing of man pondering

It turns out that over the last few years a number of smart people have thought about this and shared their frameworks for assessing the potential for online marketplaces.

Let’s take a look at what they had to say…

Framework 1: Ben Holmes of Index Ventures

Ben HolmesIn a post from July 2014, entitled “Autobutler and the Six Characteristics of a Successful Online Marketplace“, Ben described how, when looking at online marketplaces, he and his colleagues at Index Ventures look for a proposition that fulfils 6 key criteria:

For the consumer:

  • Convenience : Is it significantly easier to use the marketplace than not to?
  • Choice: Does the marketplace have a good selection of sellers?
  • Clarity: Are price and service level clear?

For suppliers:

  • Promotion: Does the marketplace provide a way for sellers to efficiently promote their offering to highly qualified buyers?
  • Productivity: Does the marketplace help sellers increase their utilisation or productivity?
  • Practicality: Does using the marketplace fit conveniently into the sellers’ workflow? (A characteristic that can be seen strongly in so-called market networks.)

(They look for strong teams, too, just as they would with non-marketplace businesses.)

Framework 2: Imran Ghory

Imran GhoryIn his blog post Markets for Marketplaces in September 2014, Imran Ghory (previously an analyst at Index Ventures) presented a great list of factors that affect whether an industry is attractive for an online marketplace.

Demand side:

  • Multiple-transaction behaviour (do customers make at least a few transactions per year?)
  • Low vendor loyalty (do customers regularly switch between vendors?)
  • Large market (customer spending of $10bn+?)
  • Expandable demand (is there ‘untapped demand’ that can be unleashed by a marketplace?)
  • Potential to improve consumer experience (e.g. reviews of suppliers)

Supply side:

  • Fragmented (do small suppliers control a large part of the market?)
  • Low conversion/high conversion (do customers typically shop around a lot before making a transaction? If so, a marketplace can have an advantage in customer acquisition costs vs any individual vendor.)
  • Supply-side servicing (can marketplace provide value-add services to suppliers because of their position?)
  • Expandable supply (would a marketplace reduce the barriers for new suppliers to enter the market?)


  • On-platform transactions (can the entire transaction be captured on-platform?)
  • Market open to a marketplace (are the participants willing to move to an online marketplace?)
  • Willingness to pay (are participants willing to pay for a marketplace?)

Framework 3: Bill Gurley of Benchmark Capital

Bill GurleyIn Bill Gurley’s 2012 post “All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces,” he described 10 factors to consider:

  1. New Experience vs. the Status Quo. (Can marketplace offer a better experience for the customer?)
  2. Economic Advantages vs. the Status Quo.
  3. Opportunity for Technology to Add Value. (e.g. providing data about market or facilitating workflow)
  4. High Fragmentation (ideally buyers and suppliers)
  5. Friction of Supplier Sign-Up. (high friction is costly but can be a barrier to entry)
  6. Size of the Market Opportunity
  7. Potential to Expand the Market
  8. Frequency (higher frequency better)
  9. Payment Flow (being part of the payment flow is best)
  10. Network Effects (is experience for customer N+1000 better than for customer N directly because of 1000 extra participants?)

Framework 4: Josh Breinlinger of Sigma West

Josh BreinlingerIn his post “The Ingredients for a Successful Marketplace” from 2014, Josh listed 5 top factors to consider as a framework for evaluating whether a marketplace should exist in a given vertical:

  1. Recurring Usage
  2. Irregular Usage
  3. Standardized Work
  4. Little Trust Required
  5. Non-Monogamous Relationships

Framework 5: Fabrice Grinda

Fabrice GrindaFabrice has written some great articles about marketplaces as well as being an active investor and operator.

In “Thoughts on Building Successful Vertical Marketplaces” from March 2013 he considered marketplaces that specialise in a particular category in contrast to broader multi-category marketplaces such as Craigslist and eBay.

Fabrice identified three factors he believes are important:

  1. Frequency: Users purchase the product or service reasonably regularly.
  2. Value in Specialisation: The vertical marketplace must offer something that is not easy for the horizontal marketplace to offer and truly improves transactions in the category.
  3. Market size

Framework 6: Andrei Hagiu of Harvard Business School and Julian Wright of the National University of Singapore

Julian WrightAndrei HagiuIt’s interesting to think about the similarities and differences between being a reseller (where you purchase inventory) and being a marketplace (where you don’t purchase inventory). In both cases you are an intermediary enabling goods or services to pass from sellers to buyers.

In this HBR article from March 2013, Andrei Hagiu of Harvard Business School and Julian Wright of the National University of Singapore looked at which of the two business models is most appropriate to a given situation.

They argued that the following 4 factors are important in this decision:

  1. Scale effects – high-demand products favour reselling since a large buyer can capitalise on economies of scale.
  2. Aggregation effects – if products and services have much higher value to buyers when bought together than when purchased separately, then this can favour reselling.
  3. The buyer and seller experiences – if customer experience is often poor, reselling tends to work better as it allows more control over the experience.
  4. Market failures – in some cases, marketplaces can collapse, e.g. due to uncertainty about suppliers or large mismatches in bargaining power. Reselling can add stability.

Andrei and Julian also concluded that different models might be preferable at different times. You might, for example, want to start as a reseller and then move towards being a marketplace. By their nature, marketplaces tend to need less capital to operate at a given scale so may be better suited to rapid growth.

Framework 7: Boris Wertz of Version One

Boris WertzIn this May 2015 article, Boris considers what characteristics make an industry attractive for an Uber-style marketplace:

  1. Underlying commoditized services
  2. High purchase frequency
  3. True on-demand use case (In most cases you don’t need a cleaning service or house painter to show up within minutes, or even the same day. But taxis are a different story.)

Further Reading


All these frameworks were designed with slightly different viewpoints in mind and to serve slightly different purposes, so their authors naturally arrived at different results. For venture investors looking for huge exits, for example, the potential size of the market is extremely important. For others, it’s less important.

There are, however, two common factors that appeared in several frameworks as important factors for the success of an online marketplace:

  • Frequency of purchase
  • Potential to improve the buying/selling experience

Imran and Josh both listed a factor that can be a result of Boris’ ‘underlying commoditised services’:

  • Low vendor loyalty

Lastly, one factor that a couple of the frameworks included and that I personally suspect is an important one:

  • Fragmentation of existing players


It’s an interesting time to watch what’s happening with online marketplaces, especially given the excitement around the likes of Uber and Deliveroo and the rise of ‘market networks‘ such as AngelList and Houzz that layer social network and workflow components on top of marketplaces.

Which industries do you think are best suited for disruption by an online marketplace next?

How Thumbtack Built a Huge Local Services Marketplace

How Thumbtack Built a Huge Local Services Marketplace

How do you build an online marketplace from scratch?

Thumbtack, an online marketplace for local services, yesterday announced a $100M funding round led by Google Ventures.

Building a local services marketplace is a notoriously difficult problem that has beaten many entrepreneurs. So how did Thumbtack get where they are? What tactics are behind their apparent success?

The founder of Thumbtack, Marco Zappacosta, was interviewed by Andrew Warner of earlier in the year and covered some of the tactics that Thumbtack used to build its marketplace. You can read the transcript of their interview here.

Here’s a summary of the tactics and approaches Marco described:

1. Built Supply Side Using Scraping and Customised Mass Emails

  • Recognising the chicken-and-egg problem of all marketplaces, Thumbtack saw the supply side as easier to get in place and focused on that first.
  • They used web scraping to compile data on local service providers and developed software to process and organise it.
  • They used the extracted information to bulk send customised emails to service providers inviting them to create profiles on the site.
  • They were concerned about being blocked by email service providers so were careful about monitoring the relevance of their emails.*
  • Their technology wasn’t limited to a specific category or part of the country, so they covered a broad range of categories and the whole US from the start.**
  • With their first $6M of funding, they had listed hundreds of thousands of service pros.

Here‘s an example of an email Thumbtack reportedly sent in 2012. What do you think: was this spam?

** It’s interesting to see that Thumbtack succeeded despite going against the common wisdom of focusing on a single city and/or category.

2. Built Demand Side Using SEO (Based on Unique Content of Service Provider Profiles)

  • Service providers creating their own profiles resulted in lots of unique content.
  • As the service provider profiles were crawled by search engines, this resulted in lots of organic search traffic.
  • More and more customers now coming from word-of-mouth and direct.
  • Have started running search and display ads, including retargeting.

3. Tried Different Revenue Models (Commission -> Subscription -> Per-Quote)

  • Initially, tried commission-based model. But had collection issues (hard to tell if an introduction resulted in paid work, lots of providers didn’t pay).
  • Next, tried subscription model. Worked okay, but wasn’t well aligned with marginal value of each introduction.
  • Currently charging providers to respond to quotes. (They can pay per response or buy credits in bulk.)

4. Off-shored Labour-Intensive Tasks

  • 75 of 200 employees are in the Philippines.
  • Main tasks for these employees are: responding to support inquiries (from customers and providers) and helping to onboard service providers.

In summary, then, in terms of building up their marketplace, Thumbtack’s use of mass emails to contacts scraped from the web seems to have been key. Another important decision was to keep their supplier profiles accessible to search engines. This allowed them to grow their demand side through SEO.

At Thumbtack’s current scale and with a large amount of money to spend, it will be interesting to see whether other paid acquisition channels will now start to pay off for them.

What other tactics have you seen used to successfully establish marketplaces? Do leave a comment below.

If you’re interested in tactics for building marketplaces, you make like to read my posts on Getting to Critical Mass: How to Start a Marketplace Business and Skillshare: How to Build a Marketplace for Online Education.

Photo by kellee_g

Skillshare: How to Build a Marketplace for Online Education

I always like hearing how entrepreneurs have managed to launch marketplace businesses. TechCrunch recently posted this interview with Michael Karnjanaprakorn of Skillshare, a platform for online education, about how they seeded and grew their marketplace.

He described two main phases in a marketplace’s journey:

Phase 1: Seeding

Where you “Roll up your sleeves up and get it done.”

Michael explains how, at Skillshare, they focused on getting teachers onto the platform as they recognised that teachers already had their own student communities who they’d be able to bring along with them. They reached out to their friends and personal contacts and tried to minimise the friction for teachers to get started, including doing non-scalable things like finding them real-world venues for the classes.

The key points from Michael are:

  • Don’t try to do everything. If you can focus on one side of the marketplace and get them to bring in the other side, then do that.
  • Reduce friction and get to liquidity as soon as you possibly can because once you do, powerful network effects then come into play.
  • At this stage, don’t worry if what you’re doing doesn’t scale.

Phase 2: Scaling

The labour-intensive approaches used in the seeding phase tend not to scale, so you then need to transition to building things into the platform to power further growth. Skillshare are currently improving their product to deliver more value to their users and help users create content and resources that, in turn, bring in more users.

Further Reading

Photo by: Emilian Robert Vicol

Getting to Critical Mass: 8 Ways to Kickstart a Marketplace Business


Are you thinking of setting up a two-sided marketplace business?

It’s a hard thing to do, so you’re going to need all the help you can get.

Why not learn from how other people have managed it successfully in the past?

One challenge of creating this kind of marketplace is that you’re going to have to understand and meet the needs of two completely different communities and you’re going to have to somehow bring enough members of each community together to give your marketplace liquidity.

Why are Marketplace Businesses Attractive?

Why try to set up a marketplace anyway? Why not keep life simple and provide a product or service to a single community instead?

Here are three reasons why marketplace businesses can be attractive:

  1. They’re a natural fit for the information-sharing potential of the web.
  2. Operationally, they can be simple: as a purely online business, there’s no inventory to look after and no service to deliver apart from the marketplace site itself.
  3. The more users you have, the more useful the marketplace is. This network effect becomes an important barrier to entry to potential competitors and goes a long way to explain the long dominance of sites such as Craigslist and eBay that, arguably, have done relatively little to innovate and improve over the years.

The Critical Mass Problem

Your marketplace will only be attractive to buyers if you have things on sale. Likewise, sellers will only be interested if you’ll be bringing them buyers. Often, to start with, you have neither. This chicken and egg problem can be a hard one to overcome!

8 Ways to Kick-Start Your Marketplace

1. Spin Out of an Existing Community

If you’re in the fortunate position of running a community that would be natural users of the marketplace, you could be in luck. SitePoint, a community for web designers, very successfully launched two related marketplace sites: Flippa (for buying and selling websites) and 99designs (a marketplace for web design). Both services originally started informally when people were posting messages advertising websites for sale and looking for web design services on the SitePoint forums.

2. Partner with an Existing Community

If you don’t own an existing community, you may be able to partner with one. You bring them new revenues; they help market the service to their members. There are various ways to do this which might involve giving them a share of the business or agreeing a revenue-sharing deal. Through white-labelling you may be able to work with multiple partners in this way.

3. Capture Contact Details to Connect Buyers and Sellers at a Later Date

A visitor to your site who doesn’t find what they’re looking for isn’t necessarily a visitor wasted. Why not give them a form to say what they’re looking for. If, at some point later, it becomes available, send them an email to bring them back to the site.

GiftCardRescue, a US gift card marketplace, does this nicely.

4. Focus on a Niche

However broad your ultimate vision for the marketplace, you might want to start by focusing on a narrow niche. For example, a marketplace for buying and selling used electronics might seem very empty with only ten listings. A marketplace for used iPads with ten relevant listings could already deliver value and appear active.

Geography is one dimension of focus that is particularly popular. Many now-successful sites (Craigslist, for example) started in a single city and only expanded once they’d reached critical mass in their initial location.

5. Advertise

This can work if you have lots of money to spend (or can raise it), but otherwise gets expensive fast (especially if the first visitors to your site see barren pages with few signs of life — they’re unlikely to participate).

6. Contact Individuals and Invite them to Join

This and the next two tactics were all used by the founders of crowdSPRING.

While researching the business, Ross and his co-founder contacted freelancers and contractors individually and asked them about their problems with existing marketplaces and what they’d like from a new one. Later, when crowdSPRING was ready, he invited these same individuals to join their new site.

7. Ask Friends and Family to Use the Site

With a healthy number of freelancers already signed up to the site, crowdSPRING then needed to address the other site of the market: jobs for those freelancers to do. One tactic they used was to ask their friends and family to post jobs.

8. Subsidise Early Use

To further encourage use of the site, crowdSPRING covered 100% of the costs of the first 50 projects that were posted. They also paid 50% towards further projects until they were satisfied that the service was working well and was ready to stand on its own.

Further Resources

  1. Brant Cooper has a post on how customer development applies to marketplace businesses. Worth a read if you’re a fan of Steve Blank and co.
  2. Mixergy has an interview in which Andrew Warner talks to Ross Kimbarovsky, founder of crowdSPRING, about how crowdSPRING got their outsourcing marketplace off the ground.
  3. How Thumbtack built a marketplace for home services.
  4. How Skillshare built a marketplace for online education.
  5. 7 frameworks for predicting online marketplace success.

Any Other Examples?

How about you? What tactics have you seen used successfully in launching a marketplace businesses?

Please share them in the comments!

Photo by mklapper