Can you imagine life today without online, consumer marketplaces?
For most people, at least those living in cities and suburbs, the answer is probably no. Think about it: We order food through Doordash, book trips through Expedia, browse entertainment on Netflix and, of course, get around town with Uber and Lyft. Twenty years ago, the only widely used Internet marketplaces—online hubs matching buyers and sellers of a particular product or service—were probably eBay and Craigslist.
Now, increasingly sophisticated marketplaces in a variety of markets represent some of the world’s most high-profile consumer businesses, and they’re generating a large amount of value for investors. To track this trend, and highlight the growing importance of marketplaces generally, Battery Ventures is launching the Battery Marketplace Index. This index—announced at The Marketplace Conference in San Francisco—tracks 36 of the world’s largest marketplace companies. To be included, companies need to be listed on one of the major global stock exchanges and boast a market capitalization of $500 million or more.
Making the cut are giants such as Alibaba Group and Ctrip from China; Groupon*, Zillow, Wayfair* and UpWork from the U.S.; MercadoLibre in Latin America; Delivery Hero from Germany; and Rakuten from Japan, among others. Some of these companies are e-commerce marketplaces that make money by taking a cut of transactions that occur on their sites, while others monetize advertising (examples: Zillow, Yelp, TripAdvisor).
Interestingly, our initial analysis showed that over the last seven years, returns for companies in the Battery Marketplace Index have outpaced the NASDAQ by a significant margin—nearly 205% for the marketplace index, compared with about 156% for the NASDAQ. We’ll be writing more soon about many of the factors underlying this dynamic, and about why online marketplaces are poised to create even more market value in the years to come.
Battery Ventures provides investment advisory services solely to privately offered funds. Battery Ventures neither solicits nor makes its services available to the public or other advisory clients. For more information about Battery Ventures’ potential financing capabilities for prospective portfolio companies, please refer to our website.