Usually supply — buyers arrive when there's inventory to browse.

How do I prevent off-platform transactions?

Provide value only the platform can — payments, insurance, guarantees, dispute resolution.

When is a marketplace fundable?

Once liquidity holds in one geo/vertical without ongoing subsidy.

Marketplace Startups: Liquidity, Take Rate, and the Cold

Marketplace investing has its own math: liquidity, take rate, cold-start strategy, and the failure modes that kill 90% of two-sided businesses.

Marketplace Startups: What Investors Fund

Marketplaces are the highest-variance category in venture. The winners are enormous; the failures are common. Investors look at a very specific set of signals.

Liquidity is the metric

For buyers: % of searches that convert to a transaction. For sellers: % of listings that transact within N days. Below a category-specific threshold, the marketplace feels dead and both sides leave.

Take rate reality

Consumer marketplaces: 10-30% (Airbnb, Uber). B2B marketplaces: 3-15%. Vertical / high-service marketplaces can go higher; commodity marketplaces stay lower. Take rate is set by the value the marketplace adds — matching, trust, payments, logistics.

Cold start

Pick one side to solve first (usually supply). Concentrate in one geography or vertical. Simulate the other side manually if needed. Airbnb photographed apartments, DoorDash ran restaurant deliveries themselves — the pattern repeats.

Failure modes

Disintermediation (both sides transact off-platform). Weak network effects (buyers indifferent to seller count above a low threshold). Constant subsidy needed to keep either side. Regulator risk that changes economics overnight.

Frequently asked questions

Which side first?: Usually supply — buyers arrive when there's inventory to browse.
How do I prevent off-platform transactions?: Provide value only the platform can — payments, insurance, guarantees, dispute resolution.
When is a marketplace fundable?: Once liquidity holds in one geo/vertical without ongoing subsidy.