Finding the Next Billion Dollar Marketplace: 6 Questions to Ask Yourself
I received such a great response for my last essay about marketplaces, Not All Marketplaces are Created Equal: Tales from a Marketplace Founder, that I was inspired to write some more! I talked about all the things that make a marketplace attractive for disruption, now I’d like to dig deeper into how to find the right one to go after.
I’m making the assumption that you want to build a huge company that would require raising venture capital to grow and scale, which may not necessarily be for everyone. There are plenty of valid reasons to go after a niche space that can sustain a great business. If you go down the path of trying to fundraise and you can’t hit the necessary hurdles to justify investment, you will have sacrificed a lot of blood, sweat and tears for nothing. More than 60% of startups shut down because their fundraising stalls before the Series A.
Here are the six key questions to answer when deciding which marketplace to build:
- Is the market big enough?
- Is it a crowded space?
- Is it ripe for modernization?
- Can you be easily disintermediated?
- Is the revenue model viable?
- Are there things you can leverage to grow and scale?
