Marketplaces are a prime opportunity for early-stage startups — here’s why
Calling inspiring marketplace founders to Berlin!
At Antler Berlin, we invite exceptional founders to join a founder cohort twice a year, where we support you in finding a cofounder to build a complementary team, as well as running deep business model validation and providing a global platform to scale.
Over the past 20 years, a number of industries have been redefined by marketplace giants like eBay, Amazon, Uber, and Udemy. These players have upended the way we shop, travel, eat, work, and learn. We at Antler are excited to see new startups solving for new opportunities across peer-to-peer, B2B, or B2C marketplace models. That is why we continue to back marketplaces which are transforming industries across the board.
Why are marketplaces an interesting space for founders?
In the first edition of the Call for Founders series, Antler Berlin outlined 10 exciting spaces for venture creation in the startup and VC ecosystem. This current edition will focus on Marketplaces — platforms that change the way markets work.
Here’s why we consider online marketplaces an exciting space for European founders.
Shift of consumer behaviour to digital & e-commerce
Consumer trends have been changing significantly over the last two decades. Most crucially, consumers have become more accustomed to shopping online for clothes, books, electronics, and miscellaneous second-hand items. For instance, from 2015 to 2020, the share of e-commerce as part of all retails sales grew from 7.4% to 17.8% ( Statista, 2022). Furthermore, the adoption of smartphones for online shopping has been a continued driver for the move towards digital and e-commerce. In 2021, 41% of consumers report that they shop on mobile weekly as compared to 12% in 2016 ( PwC, 2022). Other major drivers for people shopping online remain the possibility of comparing deals to find the best one and the convenience of e-commerce, namely efficient delivery and collection options.
Looking at these important consumer behavior trends should give founders inspiration into opportunities in the marketplace space. For instance, having a good user experience on a mobile device is becoming increasingly important as running a strong platform on a computer device. In addition to that, ensuring that consumers can enjoy a seamless customer experience (for instance, deliveries or pick-ups) should be a key priority for marketplace players. And finally, considering the COVID pandemic which has accelerated the growth of e-commerce, the changes in consumer behavior towards digital are here to stay.
Global Growth of Online Marketplaces
Marketplaces have rapidly grown in value over the last 15–20 years. This growth has been spearheaded by major players like eBay and Amazon. The COVID pandemic accelerated this continuous growth. In fact, online marketplaces experienced a rapid surge in enterprise value in years 2020 and 2021. As of December 2021, the combined value of global marketplaces was $7.2 trillion, +36% from December last year ( Dealroom, 2022).
While public companies, such as e-commerce behemoths (Amazon, Alibaba) and travel giants (Booking.com, Airbnb), contribute to the majority of the increase in value, private unicorn marketplaces also grew significantly. Grocery retailers and car marketplaces were the most responsible for the development with Europe-based Flink, Gorillas, Getir, Cazoo and Cinch attracting large investments within the last 12 months. Given the changing consumer trends and the move to digital shopping, the strong growth of marketplaces is more than likely to persist.
Record-levels of Venture Capital investment
Last year saw a record level of VC investment in marketplace business models. VC funds have invested 74% more capital in marketplaces in 2021, when compared to 2018 which was the previous record year. Marketplace startups raised $139 billion in 2021 ( Dealroom, 2022). Investments in European marketplace startups saw the largest year-on-year growth, which is a very encouraging trend for founders wanting to start a company in Europe.
In 2021, the European marketplace startups with the largest funding rounds were led by the horizontal marketplace Trendyol with $1.5 billion. The Turkey-based startup was followed by Gorillas with $1.0 billion and its competitor Flink with $750 million, with both of these ultrafast grocery delivery startups based in Berlin. These recent developments on the back of a fast-growing startup ecosystem here, make us confident that Berlin is the right place to start when founding a marketplace startup.
New trends fueling the emergence of marketplaces
Lastly, the marketplace space is an attractive one for founders to solve problems in, including those that are being disrupted by new trends affecting certain niches or entire industries. The trend around ultrafast grocery delivery is the most clearly noticeable in the last two years, with several European startups (Gorillas, Flink, Getir) benefiting from the investment wave and reaching unicorn-status in record time. It is no surprise that the food and grocery delivery space saw the largest amount of venture capital investment in 2021.
However, there are a number of other trends which lead us to believe that the boom of marketplaces will persist. While the first wave of marketplaces was focused on the B2C business models, the B2B space has gathered interest and investment more recently. The restaurant industry has been disrupted by two European B2B marketplaces — Choco and Rekki — which are efficiently connecting restaurants with their suppliers. The realm of logistics and shipping has also seen several unicorn marketplaces, among which Sennder and Forto based in Berlin.
Another important trend for marketplaces is the embeddedness of finance in their platforms, accelerated by the ongoing FinTech revolution. Traditional classifieds marketplaces, such as cars and real estate, are reaping major benefits as they are able to offer additional finance-related services within their original marketplace. As a result, innovative business models have emerged, such as car e-commerce (e.g. Cazoo). Market leaders in the car marketplace vertical offer consumers the opportunity to complete the entire transaction online by incorporating buying, insurance, financing and warranties instantly on their platform.
Several other trends are also expected to shape the playing field in the marketplaces space:
- The consumer behavior trend of moving towards more responsible consumption, starting with the food, fashion and electronics industries.
- Changing ways of working, recruiting and hiring presents countless opportunities for novel jobs marketplaces to address a specific niche such as healthcare, temporary staffing or the restaurant service industry.
- Expanding marketplace ownership of the value chain: incorporating asset-heavy models that encompass transactions, logistics, and even production into the traditional marketplace platform.
- Deploying asset-light models focused on enhancing the platform experience with add-on services facilitatied by the booming FinTech, AI and SaaS industries.
Because the marketplace model is so universally applicable across industries, products and services, we are expecting the continuous emergence of more trends which alter the field.
Which marketplace startups has Antler backed around the world, and in Berlin?
Around the globe, Antler has backed key players who have found their niche and are disrupting in this space: Reebelo, Sampingan, Tradebay, Vamstar, and randevu. We’d love to see more!
Keeping a close eye on the above-mentioned trends, Antler continuously invests in inspiring founders active in the marketplaces ecosystem. We are proud to have a portfolio of promising marketplace startups:
On the B2C side of the market, we have invested in Reebelo, the APAC’s leading marketplace for pre-loved tech devices. Backed by a total funding of $21.3 million, their vision is to refresh the way we all use electronics. While doing so, Reebelo has saved ~5 tons of e-waste to date. Their marketplace enables consumers to save up to 70% on their favorite brands and flexibly rent devices instead of buying them.
Talking to TechCrunch, Reebelo’s founder Philip Franta explains that Reebelo is part of a global consumer movement to use electonics more responsibly and reduce waste. “What we have seen is that many younger generations are very much open to the idea of sustainable consumption. We see a lot of growth and momentum in the space globally… because I think we are finally at the stage as a society where we’ve realized that the way we’ve consumed in the past is not sustainable.”
Staying in APAC, Antler has also backed Sampingan, a one-stop workforce management marketplace. Sampingan has partnered with more than 850,000 temporary and permanent workers, over 150 companies of all sizes, with a presence in more than 80 cities in Indonesia. Their mission is to provide equal job access to workers and seamless workforce management for enterprises. Based in Jakarta, Sampingan has received a total funding of $7.1 million to date.
Now looking at Europe’s B2B marketplace space, we have invested in Vamstar, a data science powered global healthcare marketplace platform. They aggregate $2 trillion of demand for healthcare products and services using AI-machine learning and providing real-time insights to buyers and suppliers to accelerate tender and contract transactions. The platform connects buyers and suppliers such as pharmaceutical, medical device companies, with public and private buyers, including hospitals and health insurance companies.
Another Antler-backed company in Europe is TradeBay, a Stockholm-based B2B global trading platform. Tradebay operates an online marketplace which lets buyers and sellers of fruit produce connect and trade more efficiently. Thereby, the solution enables safer trade in a more transparent market.
Closer to home in Central Europe, we have invested in randevu. Based in Berlin, randevu empowers anyone to build their own marketplace by providing a full-cycle marketplace infrastructure. This exciting startup has raised its pre-seed round and is currently fundraising its seed stage. We talked to one of randevu’s co-founders, Filip S. Perišic, about his view on why marketplaces are a particularly interesting space for founders.
”We are currently witnessing a marketplace revolution. It’s expected that within the next decade 30% of all global economic activity will be mediated by platforms that are not founded yet. Majority of people still connect marketplaces only to online-shops like marketplaces (so-called multi-vendor stores) such as Amazon. However, well-known businesses like Uber, AirBnB, Tinder, DoctoLib, and many more are marketplaces as well. Platforms in different B2B/B2C verticals are yet to come and first-mover advantages are awaiting entrepreneurs around the globe. Our vision at randevu is to serve all those platforms with our infrastructure that allows us to build and scale unique marketplaces across industries.”
The most exciting is yet to come!
Antler Berlin is determined to support founders that are taking advantage of the opportunities that the marketplaces presents. We will do this by investing in exceptional founders that are passionate about solving problems in the space. Given the abundance of trends shaping the marketplaces field, we are convinced that the most exciting is yet to come.
In addition to marketplaces, we at Antler are keeping an eye on additional areas within which founders can build their ventures in Berlin. Stay tuned for our next edition, where the Call for Founders series will continue by covering the Fintech space.
If you are interested in building the next global marketplace, apply to be an Antler founder here.
Additionally, to find out more about the Antler experience, you can hear from our partners and founders at Antler Berlin. Join our Office Hours every Thursday at 1pm (CET) with this Zoom Link.
Antler is a global early-stage venture capital firm that builds and invests in the defining technology companies of tomorrow, having invested in over 400 companies to date. Our network is expansive, with offices across most major entrepreneurial hubs, including London, Berlin, Stockholm, New York, Singapore and Sydney.
Originally published at https://www.antler.co.
