The Speedinvest Network Effects Marketplace Scorecard (open beta)
An open-source guide to rate the viability, sustainability and overall attractiveness of your network effects-driven early stage startup
TL;DR: Click to access the Speedinvest Network Effects Marketplace Scorecard & get the detailed methodology from Philip. Join us for The Marketplace Conference to learn more about how investors assess early-stage marketplace startups.
Recently, there has been a lot of discussion about a more systematic approach in (early stage) Venture Capital sparked by books such as “Principles” by Ray Dalio, “Platform Revolution” by Parker/van Alstyne/Choudary or Ryan Caldbeck’s (in)famous tweet-storms about the lack of (and need for) systematic VC funds.
Inspired by those as well as many others (more on that below), we’re releasing the Marketplace Scorecard in an attempt to
a) make our internal decision-making framework at Speedinvest Network Effects more transparent and transferable;
b) provide guidance to (future) marketplace founders and entrepreneurs on how to build a sustainable marketplace- or platform-business;
c) rate its “(early stage) Venture Capital readiness”.
About 10 years ago, I started my exciting journey in investing into and building early stage marketplace businesses. Over the years, I have made several observations (e.g. at our very own The Marketplace Conference) and learned a few lessons, some of which I`ve tried to summarize in blogposts e.g. about investing in marketplaces, building platforms or SaaS enabled marketplaces.
While setting up Speedinvest Netowrk Effects about a year ago, building up the team, fine-tuning our thinking, thesis and investment focus and making our first 10 investments, we decided to refine our approach when discussing new investment opportunities that all share one common trait: the potential to develop powerful network effects. We touched the same points and thoughts over and over again when assessing different startups in the team. In short, we needed to systemize, structure and streamline our investment decisions.
In order to do so, we had to extract all the relevant knowledge, experience, thoughts, ideas and observations not only from the “brains” of our team members but also from the various sources of information. After all, there are many other, much smarter and way more experienced people out there who have studied, built and/or invested into successful marketplaces and who inspire us every day. To name just a few: Bill Gurley of Benchmark Capital, Sangeet Paul Choudary, Boris Wertz of Version One Ventures, James Currier of NFX, Jonathan Golden of NEA (and previously AirBnB), Reid Hoffman, Andrew Chen and the whole “marketplace-team” at Andreessen Horowitz, Josh Breinlinger of JSV — I stop here although the the list goes on and on. (If you`d like to get a more comprehensive overview of great minds who have shaped the discussion around marketplaces, check out this list by Andrew).
Creating a comprehensive scorecard is a challenging, if not-impossible task, being proper x-men we still wanted to give it a try. 😜 As a result, we’re very happy to share with you the “open beta version” of our first Speedinvest Network Effects Marketplace Scorecard (get the “excel-version” here).
Disclaimer: When clicking through the scorecard, please bear in mind that
a) this is just a first attempt i.e. our first “beta version” and has to be treated as such;
b) it does not work equally well for all types of network effects-driven startups. It is most suitable to assess typical marketplaces that already have an initial level of (non-financial) traction;
b) this is NOT a comprehensive overview of our entire investment process;
c) this is NOT the “universal truth” of marketplace investing BUT just our own take on it that we’d like to share with you;
d) albeit we like to pretend to be superheroes a.k.a. x-men, we cannot summarize all the knowledge in the world in one rather simple typeform-survey or basic excel-sheet. 🙃😉
We hope that this framework still helps you to assess and structure your own marketplace ideas or projects and we’re keen to discuss these with you anytime! Please do not hesitate to share your comments and thoughts below, so we can improve the scorecard and release a “1.0 version” ASAP! 😉
If you want to learn more about building startups with powerful network effects and how investors assess them, join us for the first European Edition of The Marketplace Conference on November 28th 2018 in Berlin!