The number of cloud marketplaces that match businesses (or consumers) with an individual service provider or service providing company is hard to estimate. I’ve written about elance and odesk and several others. A recent article on cataloged a few more.  There are clearly dozens ranging from providing matches in legal services to lab experiments.

Most of these companies are small and private, with a major exception being Angie’s List (ANGI). But another fast-growing marketplace,, is scheduled to go public Friday. Two interesting challenges all of these businesses face are how they:

  • monetize the matching process (e.g., listing fees, ad fees, search fees, or success fees) and then
  • try to participate in the ensuing transaction and even the ongoing relationship (think Paypal for Ebay)

Angie’s List, for instance, charges a membership fee to the buyer to search the directory and ratings, which is unusual.  ANGI also charges advertising fees to the seller. ANGI was not originally involved in the ensuing transaction, but the company has been trying to get involved in that transaction.  (I’ve stayed away from ANGI’s stock because I don’t like the renewal rates of the buyer subscription fee and also because of the non-recurring nature of the need.)’s prospectus provides an interesting look at yet another business model in this space., as with many marketplaces has a freemium model on both sides of the marketplace and charges a subscription for “value-added” services on both sides as well.  The best summary of their business model is shown in this graphic from the prospectus:

Diagram of multi-sided marketplace

Wherever you see an asterisk above, you can see how is trying to monetize the relationships they are creating in matching families with caregivers.  Families who pay a subscription fee, can message the caregiver through the platform (this seems hard to do otherwise since identities are masked) and can receive a preliminary background check on the caregiver.  Likewise, paying caregivers can move up in the search results, get priority notification of opportunities (no “net neutrality” here), and provide a preliminary background check. tries to stay involved in the resulting transaction through payment and tax recording services. is growing at 80%+ annually, with revenue of almost $60 million in the last 9 months ended 9/28/2013, up from just $13 million in the full year ended 2010.  Like many companies in the space, EBITDA is negative, with an adjusted EBITDA of -$16 million for the latest nine months.  It is a great growth market and one that any baby boomer, or young parent, can see fulfills a great need.  But is it a great business? And, even more important for me and you, is it a great investment?

Evaluating marketplace companies is much easier if the company provides non-GAAP metrics, such as how much commerce they have facilitated (Gross Merchandise Value (GMV) for ebay) and renewal rates of the various participants.  (ANGI, to their credit, shows the cost to acquire a customer (CAC) and renewal rates by cohort!) does provide non-GAAP numbers for:

  • Total families and caregivers on the platform (and the sum of these)
  • Total paying families and caregivers
  • Total revenue per paying family and caregiver

No numbers are yet provided on renewal rates or GMV, as the company basically states it is too new to know these.  Here’s the most insight I could find in the prospectus:

Currently, most of our paid memberships are monthly memberships, and the average paid membership length for our consumer matching solutions is approximately seven months. As a result, we must regularly replace paying members who allow their membership to lapse with new paying members either by converting existing non-paying members or by attracting new members to our service. Our anticipated member acquisition costs and our analysis of the revenue that we expect new paying members to generate over the life of the membership depends upon several estimates and assumptions, including lengthening paid memberships and increasing renewal rates, including conversion rates of existing members to paying members, future membership fees and our success in cross-selling existing and new products and services to members.

Bottom line: the company is still working out its core business model/ SaaS metrics and wants some of your cash to help.  (Perhaps you have seen the ads on TV?) It’s a reasonable request for those with risky investment appetites–after all Google and Facebook asked the same of investors.  I actually think they have a good shot at making it, but I’ll stay on the sidelines until I see a little more data.

Take, please!

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