Startup Funding Espresso – Network Effects in Marketplace Businesses

Network Effects in Marketplace Businesses Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Marketplace businesses derive value from the network effects that come with matching buyers and sellers. The greater the number of buyers and sellers the more attractive the platform. One side of the marketplace can attract the other side. If one side is using the software platform, then the other side will follow. One side can demand the other use the platform as the financial transaction or the flow of goods and services goes through it. Marketplace businesses can use network effects to connect more suppliers to the business as well. By connecting suppliers through the software platform you can decrease costs and increase the size of inventory. Marketplaces with network effects give the business a moat against competition as the competitor is not competing against one company but rather a network of companies. Marketplace businesses can use the network effects to create new products and services by bundling together a collection of services from multiple suppliers. Marketplace businesses can scale faster and cheaper because they are aggregating supply from multiple businesses rather than just their own business. Finally, marketplace businesses use network effects to retain users as it's sticky. Once in place, network effects can bring exponential growth to the business. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let's go startup something today. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Investors check out: https://tencapital.group/investor-landing/ For Startups check out: https://tencapital.group/company-landing/ For eGuides check out: https://tencapital.group/education/ For upcoming Events, check out https://tencapital.group/events/ For Feedback please contact [email protected] Please follow, share, and leave a review. Music courtesy of Bensound.