What every marketplace founder should have in their investment deck

Recently I was helping a founder talk through her growth strategy and cap raise plans. Her deck pitch was coming together, but to make it pop, I suggested several things to bring to the fore of the story. I have collated these, and several others, for you here.

This list is targeted at investors who look for companies with a large return in mind. VC land, Angels etc - they have an outweighed preference for large-scale returns and high-impact investments.

Here are the top 10 things you need to convey in your deck for investors like this, in addition to the basics of your deck.

Core marketplace GMV potential

This is TAM but bigger - the general idea behind this is to demonstrate to investors that the market is at a certain point now, but as behavior changes, the total GMV potential will grow. You want to talk about what the market will become, preferably as you bend consumer behavior to your will. A good example here is Airbnb, thinking about the total potential market, once they normalized sharing rooms out to strangers is so much bigger than the standard way of considering Travel spend for example.

Your landed economics for each side of the marketplace

How much does it cost you to land a participant on both sides?

Being able to show a clear growth strategy for both sides of your marketplace is key. As you grow and scale, you need to be confident in your ability to match fill rates on both sides - if there is a growth handbrake on one side, then the whole engine stalls - if you have a specific tactical playbook for this already - akin to the uber city growth play, then outline it. For virtual marketplaces, the balance of growth on both sides needs to be clear and demonstrable (e.g dollars into a funnel, leading to a key moment of value exchange, time to key moment, and channels and tactics to get them there).

Clear frequency evidence

Killers of marketplace deals are often a result of low frequency - or lower frequency, than a roll-up marketplace can deliver. Think marketplace for Plumbers > into a home repairs marketplace.

Experimental evidence of how you break the “empty dancefloor” problem, in your growth model

If you are seed or series A, then you need to demonstrate how you have broken this problem. The mechanisms are extensively documented - but vary depending on your market. You just need to have show that this is not that big of a problem for you - given that you will always have a new market somewhere in your journey, regardless of size.

Experimental evidence on how you land participants in the market (ranges, and growth channels)

Where do you find your participants and how? This is sometimes only really required on one side of the market. Premium marketplaces just need to prove they can find and land high quality, assuming enough latent market demand.

Other times supply has primacy (e.g. Uber has enough riders, and drives will swell to meet the demand based on earning potential) - other times they are equal. Either way, you need to prove you can get them easily - and preferably with cheap acquisition channels - if your strategy hinges on a shitload of TV advertising, then it might not be the best one investors have seen.

Linked financial model into your Marketplace economics

This is sort of a given, but you need to quickly supply a financial model that backs up your core metrics and shows the key assumptions of your model.

Low trust, low monogamy relationships in the value proposition or marketplace trust over individual trust.

Services and other economic transitions that require high trust, and high monogamy relationships generally don’t work well in online marketplaces. The reason for this is simple - if you have to facilitate lots of interactions to get someone over a trust barrier, then you, the market maker, need to know that person will transact a lot - if the trust is embedded in a person, eg a nanny that looks after your kid, then the marketplace role is diminished - and not as relevant.

You need to transfer the trust relationship to your value proposition. This may be done already via regulation - e.g. you can’t hire someone who is not qualified, and you vett those or provide them, other times you may provide a sense check on the individuals to build trust (police checks are an example of this).You may not be able to address this fully as some marketplace categories require trust and monogamy to a point, but, try and highlight how you either take on the trust element, or minimize the monogamy, or show how consumer behavior is changing to accommodate your model.

Core metrics

Fill rates, visit to book rate, expel rates, model mix rate (double commit, buyer picks, supplier picks) and benchmarks to fill ratio standards for comparable markets - basically this a marketplace health scorecard, or dashboard - with actions on metrics that are low or tied back to growth reasons. Make sure this marketplace health is provided at a glance to investors.

There are many other things you may need to demonstrate to investors as your relationship develops, towards an investment moment, but being able to demonstrate these things should give them confidence in your ability to manage and address the core aspects of a marketplace growth model.