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Why we love the middleman

Author
Bas Rieter
Date
August 20, 2021

Why we love the middle man

The mantra of Cutting out the middleman prevails in the venture ecosystem. An extra node in the supply chain would only hinder transactions, burden either the seller or the buyer with extra costs, and would only allow for opaque transactions. But don’t be fooled: these middlemen are exactly the type of founders we are looking for.

Goin’ niches.

The B2B landscape has seen a serious metamorphosis in recent years. Traditional, legacy-keen industries such as construction, freight and agriculture that struggled to find the right digitization mindset were stirred by niche and tailor-made marketplaces that promised to remove friction by letting both buyers- and sellers engage in a more efficient way.

Think of Cargo.one, that got rid of ancient email-based work- and payment flows for air cargo via an interactive dashboard. Or perhaps the UK-based marketplace SellMyLiveStock, that - you guessed it - offers both merchants and farmers a platform to sell their cattle, removing the need to show up at livestock markets.

The common denominator of these marketplace can be found in their focus. Almost all of the successful B2B marketplaces that dominate the European ecosystem claim a certain niche: whether it’s livestock or air cargo. By gearing the attention to a specific vertical, niche marketplaces are able to carefully curate their options for demand (or supply), allowing for swift onboarding and making it much more convenient for parties to find the right transaction partner. No extra fees , nor middlemen. Convenience reigns supreme.

Walked the talk

Naturally, our love for middlemen does not originate from the fact that they are holding up the supply chain. It just so happens that many successful B2B marketplace founders were, at some point, a middleman themselves. They experienced first hand how their margins got eaten away by the endless nodes in the supply chain, how the supply-side was completely oblivious of where their product was going, and how slow things moved.

Great founders channel that frustration and use it to their advantage: with all of the contacts, network and skills in place, an ex-middleman makes the perfect guy (or girl!) for the job. They understand the problem like no other and can often onboard their first clients in no-time, fostering GMV on the platform (which is key in getting through that very first stage).

At our fund, we like to back founders who have been in that exact position: those who disrupt their own market since they really understand the problem that they are solving. Happen to be such a founder? Then we’d love to meet. You know where to find us (but here is a link anyway).

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Bas Rieter from Dutch Founders 👋

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