B. Here’s a tactical playbook for solving the cold start problem and scaling yourself as a leader.
billion in loans to small and medium-sized businesses (SMEs). Founded by Kelvin Teo and backed by firms like Sequoia, Softbank Ventures, and Golden Gate Ventures, they did this by cracking the hardest puzzle in startups: the marketplace cold start problem.
For founders, a marketplace is a tantalizing model. But getting one off the ground means solving the classic chicken-and-egg dilemma: you can't get customers (borrowers) without inventory (lenders), and you can't get inventory without customers. Most founders fail here.
This is the playbook for how you can succeed. We’ll break down the tactical frameworks for igniting a two-sided marketplace and how you must evolve as a leader as it scales.
Solving the Marketplace Cold Start Problem
Every marketplace founder faces a dead platform with no users. Your first job is to manufacture the initial spark that leads to a self-sustaining fire. Don't try to launch to everyone. Instead, focus on creating a single, hyper-specific, liquid market. The three most common strategies are to constrain the market, artificially pump one side, or provide a single-player tool.
Strategy 1: Constrain the Market
Your goal is not to build a massive, empty stadium, but to fill a single VIP section. You need to constrain your market by geography, vertical, or a combination of both until you can create a high probability of a successful transaction.
For Funding Societies, this might have meant focusing *only* on manufacturing SMEs in Singapore seeking loans between $50,000 and
00,000. Not all of Singapore. Not all SMEs. A tiny, well-defined slice.
How to apply this:
- Define your "atomic unit": What is the smallest possible version of your marketplace that can stand on its own? Is it one neighborhood for a delivery service? One type of collectible for a hobbyist marketplace? Be brutally specific.
- Engineer early success: Once you have your atomic unit, manually match the first handful of transactions. Do things that don’t scale. Call suppliers yourself. Onboard the first customers personally. Your goal is 10 perfect transactions, not 1,000 mediocre ones.
Common Mistake: Premature geographic expansion. Founders get one city working and immediately try to launch in ten more. This stretches resources and dilutes network effects. Master one niche, then expand to an adjacent one.
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