Given the frequency of media stories focused on a handful of startups with billion dollar…
Entrepreneurship
When we look at investment opportunities, we need to consider the type of market that the potential investment is in. How much room is there for a market leader or leaders? Is it winner-takes-it-all or winner-takes-almost-all? Is there room for multiple potential winners? Winner takes all These markets are driven by network effects and only […]
Given the frequency of media stories focused on a handful of startups with billion dollar…
We’re just a few weeks into 2018 and have already completed three portfolio exits: @Mattermark…
When we look at investment opportunities, we need to consider the type of market that the potential investment is in. How much room is there for a market leader or leaders? Is it winner-takes-it-all or winner-takes-almost-all? Is there room for multiple potential winners?
Winner takes all
These markets are driven by network effects and only one company will win in the space. Examples of these winners include eBay (auctions), LinkedIn (professional networking), and YouTube (video). When these markets first emerged on the scene, there were dozens, if not hundreds, of companies vying for market share. Yet, only one dominant product survived.
Winner takes almost all
This market trend is happening across the enterprise where adoption is driven by end users, and not dictated from above by IT departments. In this case, a company or tool can emerge as a clear category leader, as word of mouth among satisfied users accelerates adoption across colleagues, departments, and companies. As a result, the tool can grab a large market share in a certain market segment or vertical. Think Mailchimp, Dropbox, Hightail or Unbounce for horizontal solutions or Clio, Jobber or Frontdesk for vertical products (disclosure some of those are portfolio companies). In particular, we see a winner takes almost all dynamic happening in vertical SaaS plays where word of mouth can quickly travel within one industry. For example, lawyers from different firms may work on the same case and spread exposure of favorite tools.
Multiple winners
When markets are not subject to network effects (or there’s minimal network effects/word of mouth), multiple winners can emerge. Today this type of market is mainly in commerce and enterprise IT.
The bottom line
As an entrepreneur, you need to understand what kind of market you are in order to create effective growth and fundraising strategies:
Of course, all of this is made even more complicated by the fact that it’s not always clear what the exact category is. For example, do Lyft, Sidecar, Hailo, and Uber all belong to the same transportation category or do they each define their own category? As an entrepreneur or investor, you’ll need to analyze the market and its current players to know how much room (if any) is left.
Portfolio
It’s been an eventful quarter (when has it not?), and somehow we’ve already crossed the halfway mark of 2025. We wanted to take a moment to highlight just a few of the wins, milestones, and momentum we’ve seen this past quarter. As always, there’s a whole lot happening behind the scenes that can’t be shared […]
The V1 family kicked off the new year with fresh energy and no shortage of…
At the end of Q1, we anticipated that a tech sector slowdown is ideal for…