Adevinta Ventures Report: "Supercharged" Marketplaces Set for Major Growth, While Real Estate Funding Growth Down 76% YoY

February 15, 2024
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Adevinta Ventures, the investment arm of Adevinta, has published a report outlining how the emergence of new technologies including fintech, SaaS and generative AI will "supercharge" traditional marketplaces.

Highlights from the report include:

  • Venture capital investment in marketplaces is shifting to other business models like SaaS or hybrid models.
  • Specialised vertical marketplaces attracted 90% of VC funding over the last three years—leaving just 10% for horizontals.
  • B2B marketplaces attracted an all-time-high 20% share of the funding going to marketplaces, thanks to being less impacted by economic uncertainties.
  • AI "supercharged" marketplaces are showing considerable growth as they are better equipped to meet the diverse needs of users.

The report, commissioned by Adevinta Ventures in collaboration with startup venture capital intelligence platform Dealroom, analysed more than 35,000 marketplaces across 30+ market segments.

The focus of the report highlights the emergence of enabling technologies (e.g. fintech, SaaS, GenAI) as attracting the largest proportion of available investment for evolving marketplaces.

In short, the report suggests that this new generation of "supercharged" marketplaces will eventually topple traditional models that aren't built on modern technology. Businesses including GenieMode, Samara, Inventa, Supercritical, Safi, and Upstream were all namechecked as notable supercharged marketplaces.

Meanwhile, B2B marketplaces appear to be attracting a lot of investor cash—$6.3 billion was raised in B2B marketplaces in 2023, a record-high of 20% of total marketplace funding, and almost double the 12% of total investment in 2022.

Jordi Iserte, Investment Director at Adevinta Ventures, said:

"We are witnessing an evolving landscape where the synergy of SaaS solutions, fintech, and AI is boosting the marketplace sector.

"The rise of multi-business model marketplaces is now capturing investors’ interest as they explore vertical and niche possibilities, coupled with venturing into under-digitised B2B segments."

Are Real Estate marketplaces less attractive than ever?

The report shows that real estate marketplaces received $1.7Bn of funding in 2023, with growth down by a staggering 76% compared to 2022—the biggest YoY drop-off by industry worldwide.

By comparison, the Fintech industry received $5.6Bn of funding (-73% YoY), while the food industry received $5.2Bn of funding (-53%).

The report also suggests that increasingly marketplaces are funding themselves with debt. According to the report, no fewer than six companies took on debt of at least $300M in 2023, with EquipmentShare (construction) raising a debt round of $640M in May:

"Marketplaces are increasingly reliant on debt. Over $14B in debt was raised, a record-high 30% of total private financing raised."

VC funds have raised more than $500Bn since 2021, and not all of this cash has been committed to investments. However, the report outlines that economic uncertainty and a stronger focus on due diligence will slow the pace of investments in the next 18-24 months, even though appetite and resources are as big as ever:

"Investors are shifting their strategy, moving away from spreading bets thinly and instead concentrating efforts on identifying potential winners at even earlier stages. The influence of hot trends has become more pronounced in shaping investment decisions."

The report's conclusions are similar to those of Adevinta Ventures' 2021 report which suggested that "FinTech enabled" marketplaces would be well placed to take market share.

February 15, 2024
Harvey is an experienced property journalist and copywriter. He has written about the property industry since 2015, starting at The Property Franchise Group in the UK, before moving to Spain to work for Spotahome. He has blogged for the private rented sector, ghostwritten for UK property experts and written case studies for franchise owners around the UK. Harvey joined Online Marketplaces as a News Editor in 2022.

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