Why We Say No to Marketplace Startups

At IA Global Ventures, we back foreign-born founders building software companies with global ambition. A lot of startups we evaluate have real traction in their home markets - often using clever marketplace models to solve local problems efficiently.

We’ve seen everything: babysitting apps from the UK, last-mile delivery platforms from Poland, pet-care exchanges from Brazil, and all kinds of on-demand services out of India. These founders show up with revenue, case studies, and a clear next step in mind: expand to the U.S.

And yet, we don’t invest in marketplaces. Here’s why.

What is a marketplace?

At the core, a marketplace connects buyers and sellers. That could mean booking a babysitter, hiring a cleaner, or ordering food. Think TaskRabbit, Thumbtack, DoorDash. All of them operate by matching localized supply with localized demand.

It’s a straightforward model, but much harder to scale than it looks.

Marketplaces are inherently local

Unlike SaaS or API products that can scale globally with almost zero marginal cost, marketplaces are tethered to geography. A great dog walker in Chicago does nothing for a family in Austin. A delivery fleet in Warsaw has zero relevance in Houston.

Each new city is a new business. You need to rebuild supply from scratch before you can even think about demand - and even then, adoption is slow. People don’t want to be the first to try a platform with limited coverage or unknown service quality.

The tech is easy. The hard part doesn’t travel well.

Most marketplace software is commoditized: scheduling, payments, matching, maybe some basic algorithms. The real value is in the network you build - the density, liquidity, and trust that take time to establish.

But that network is fragile. Providers multi-home. Customers price-shop. Loyalty is low unless you’ve hit a certain scale -and even then, you’re always vulnerable to churn.

And while brand and liquidity might be an edge at home, they don’t always carry across borders. A strong brand in Portugal might mean nothing in Pittsburgh. Worse, it might actually hurt if it signals “foreign” or “niche.”

Scaling means starting over, and over, and over

Here’s the crux: every new market means rebuilding from zero. You can’t just “launch in the U.S.” and expect things to click.

Supply-side onboarding is slow and expensive - boots on the ground, local marketing, support. Demand-side growth depends on local trust, word of mouth, and repeat usage.

So instead of riding the SaaS scalability curve, you’re spending capital city by city, trying to build network effects from scratch. Meanwhile, you’re fighting entrenched local players in every one of those cities.

What we look for instead

At IA Global Ventures, we back companies with true cross-border leverage - especially those that scale through product, data, and AI, not just headcount and hustle.

Don’t get me wrong. We’ve got huge respect for marketplace founders. It’s a grind, and many of them are brilliant operators. But our model is designed for companies that scale on the strength of their tech, not their logistics playbook.

If you’re a founder outside the U.S. thinking about expanding, ask yourself:

• Is my value prop location-agnostic?
• Do I have a defensible edge that travels?
• Can I scale with software, not just operations?

If the answer to all three is yes - let’s talk.