We in Evli Growth Partners are enthusiastic about tech-enabled marketplaces that create significantly value for all stakeholders in different sides of the market. Most of today’s leading companies are built on top of network effects, and we believe they will drive digitalisation in increasing number of fields during the upcoming years.
Marketplace as a business model is regulated by its own laws and, thus, we typically measure marketplace companies with a specific set of metrics. Some of them are generally applied across every field, others are more characteristic to marketplaces.
I was lucky enough to share my five cents about the core marketplace metrics for early-stage fundraising in Latitude59 mentoring program by hosting two sessions to aspiring early-stage founders. Attached, I’m sharing the same material I presented in these sessions as an introduction to the topic before we dug deeper into individual founder’s view.
There are dozens of relevant metrics that any founder could consider. I think it’s one of trickiest questions you face in the early-stage to find out the correct set of metrics to follow: you need to make sure there’s a clear focus, but still track every relevant aspect of your business! I classify the metrics we typically focus on to 3+1 categories:
- Growth & Profitability
- Product: Supply & Demand
- Unit Economics
- + Most importantly: Network Effects
The appropriate set of metrics for any entrepreneur is always case-specific, depending on the product, market dynamics, and the phase of your company. Therefore, your investors may request different things from you in every round you raise, and many metrics I propose may be irrelevant for you currently. Yet, I think each of these categories include some metrics you should follow. Also, they may help you to structure your thoughts and find focus areas.
Based on this categorisation, there are three points I find important for any early-stage entrepreneur:
- Grow, grow, and grow (but understand the trade-off with profitability)
- Understand and measure the dynamics of your market for every participant
- Start tracking and analysing your cohorts from very early on
To read my take on the topic in full, download my presentation from here!
I’d love to hear your opinions and have a chat about the specific set of metrics you as a founder are following! If you’re building an early-stage marketplace startup, please don’t hesitate to be in touch from here. Also, to be updated, please follow us from here!