Investors evaluate B2B marketplaces on three things: whether they move workflows from phone and fax online, whether they improve margins for buyers and sellers, and whether they add sticky features like quality guarantees or embedded financing. Examples include RigUp for labor, FAIR for wholesale, and ACV Auctions for industry-specific deals.
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love to learn a little bit more about, you know, what you specifically look for in B2B marketplaces that you invest in. Yeah. So maybe just like to set the stage, I would say like at a, at the highest level, obviously marketplaces by definition are sort of matching supply and demand. Everyone on here knows that. And reducing some kind of friction from an existing process. But most of the time, particularly in B2B marketplaces, which is where I'll probably spend the bulk of my time chatting today, I'd say the most successful marketplaces tend to have all those things I mentioned, but also there's much more that I look for. And so, um, I guess maybe before I get into exactly what all those things are, just in terms of like the types of B2B marketplaces that I like, um, I try to like split them up between— there's like these services or labor marketplaces. So like things like RigUp, right? So it's, it's it's people-based. And then there's like wholesale marketplaces. So like FAIR would be a good example of that. They sell retail goods. They're usually like— there's usually that model is like removing middlemen from a process a lot of times, you know, streamlining of purchasing or, you know, creating broader access to products, that kind of thing. And then there's like more industry-specific marketplaces, and you see a lot of these in the Barry Capital portfolio. This would be something like, you may be familiar with a recently gone public company called ACV Auctions. That's a marketplace for like car dealers to buy and sell used cars. We are invested in a marketplace called Rebis, which is a marketplace for buying and selling like industrial materials, like raw industrial goods like steel. And in these models, it's usually more about streamlining a traditionally offline process. Usually consisting of brokers and/or like some kind of RFP process to, you know, facilitating transactions, bringing it online, and reducing a lot of the friction in the process. So that's kind of how I think about it. It's kind of like the labor, the wholesale, and the industry-specific marketplaces. Now, I guess, like, in terms of what I look for, your actual question, I will evaluate kind of all 3 of the types of marketplaces. The basic framework I like to use, like, Let me see if I can talk you through it like at a high level. But first, I just, I look to see if they offer both sides of the marketplace an experience, some sort of an enhancement or convenience that just simply wasn't possible before the marketplace existed. A lot of times in B2B, it comes down to like technology and actually using that to make a significantly better experience and sort of change how people did business in the marketplace. Before your marketplace existed. So a classic example here is just taking any market that was doing business with phone calls, emails, fax, and putting the entire workflow online. Um, so I, I think that's important. Next, you know, I usually like to see some kind of margin improvement or economic improvement. Like, ideally it's on both sides of the market. Um, you often see this in those marketplaces I talked about that are cutting out middlemen or brokers from the process. Like, that's the That's oftentimes a lot of the value add. And then I also put a lot of value not just on like facilitating a connection between the buyer and the seller, but just some sort of additional value add that's driving both parties to use and prefer this marketplace over the alternatives. So it's totally different depending on the marketplace. I think a big one I'm seeing here a lot is building some kind of like trusted platform and brand. So with Rebus, the industrial materials marketplace we're invested in, the marketplace is anonymous, meaning buyers don't know who they're buying from, sellers don't know who they're selling to. You know, everyone essentially feels like they're doing business directly with Rebus. And so what they've— what Rebus has had to do is like, there's— they're kind of on the hook for the quality of the product that's going through their marketplace. But their stamp of approval has gained them so much trust and respect in the industry. And so, like, their kind of continued promise on quality and delivery has actually, you know, ultimately made them almost like a more reliable partner to work with than transacting in, like, the old way. So that's another thing I like to see. I think another frequently seen kind of value-add marketplace Is anyone who's also handling like the fulfillment and delivery of goods? You know, this is all going back to the theme of like somehow improving the overall experience, making it more enjoyable. A few other like common value adds we see in the B2B marketplace side. You know, a lot of folks are building some element of like workflow software, like inventory management systems or productivity tools, which can help just streamline or simplify these like more complex transactions in some way. I'd say more recently, a thing that's been coming up a lot in our portfolio and outside of it is offering some kind of financing element. So a lot of, you know, like allowing sellers to get paid sooner or buyers to borrow money to make purchases now or in the future. These tend to be super sticky products, and there is a lot of complexity behind rolling out something like this. And I think there's some like points from a scaling and traction standpoint for when you should consider these things. But that one's just been very top of mind, um, really in all of the marketplaces that we're invested in right now. So I think it's definitely something that's— it's just timely, uh, mostly because like there are technology and people building infrastructure that you can implement a little bit more easily than building these things yourselves now for like first time ever. So I've been rambling for a while, but hopefully that gives at least some helpful context for how I think about these things. And I welcome any questions along the way. I don't know how you like to format these, but I'm happy to chat.
