Now that you’ve learned a lot about how marketplaces work, let's summarize how you can evaluate marketplace businesses as an investor 🕵️‍♂️

1️⃣ Don’t forget the fundamentals.

Marketplaces, while unique in many ways, are still just businesses, so start by evaluating their fundamentals like you would for any other business.

Is the company growing its revenue and profits? How profitable is it? Does it have a strong balance sheet with more assets than liabilities? 💸

2️⃣ Next, try to determine how the marketplace makes money — is it from take rates, subscription fees, listing fees or other means?

Understanding how a marketplace makes its money can help you understand what the biggest risks are to its business model 💡

3️⃣ Look for marketplaces with strong network effects where the value for each user increases as more users join.

This can signal long-term growth and sustainability 🌐

In addition, check for Crossover Network Effects

Platforms where users act as both buyers and sellers, like eBay or Depop, can be especially resilient against competition 🔄

4️⃣ Evaluate the marketplace's take rate

Is it making its fair share of revenue for each transaction? How do buyers and sellers feel about the take rate?

5️⃣ Research the competitive landscape, and understand the marketplace's position within its industry 🏰

Marketplaces are a unique type of business with unique risks and rewards 🌟

Now when you see a marketplace business on Bloom, you'll have a framework for how to think about it!