The structural limits of local platforms—and what we look for instead

At IA Global Ventures, we back foreign-born founders building globally scalable software companies. Many startups we meet come with strong traction in their home markets—often through clever marketplace models that solve local problems efficiently.

From last-mile delivery platforms in Poland to pet-care exchanges in Brazil, we’ve seen high-performing teams with revenue, users, and a clear next step: expand to the U.S.

But despite the traction, we don’t invest in marketplaces. Here’s why.

What Is a Marketplace?

A marketplace connects buyers and sellers—booking a babysitter, hiring a cleaner, or ordering food. Think DoorDash, Thumbtack, TaskRabbit. These businesses match localized supply with localized demand.

On paper, the model is simple. In practice, it’s far more complex—and harder to scale than it seems.

Marketplaces Don’t Scale Like Software

Unlike SaaS or API products, marketplaces are inherently local. A top-rated cleaner in Paris has no utility in Portland. Each new city is a new market. You must rebuild supply before generating demand, and adoption is often slow.

This makes the business model capital-intensive and geographically constrained.

Tech Is Commoditized—The Network Is the Moat

Marketplace software tends to be standard: scheduling, payments, matching, and basic automation. The true value lies in the network—its density, liquidity, and trust.

But networks don’t travel. Providers use multiple platforms. Customers compare prices. Loyalty is limited until you achieve dominant scale. Even then, retention is fragile.

A strong brand in Brazil may mean little in Boston. In some cases, being “foreign” can even be a disadvantage.

Expansion Means Starting From Zero—Every Time

Marketplaces can’t rely on the scale advantages of traditional software. Each new geography means local marketing, operations, customer support, and supply-side onboarding.

Instead of compounding growth through product-led scale, marketplace startups spend capital city by city, rebuilding network effects from scratch. All while competing against entrenched local players.

What We Look for Instead

At IA Global Ventures, we focus on companies that scale through technology—especially those leveraging software, data, and AI to expand across borders.

We admire marketplace founders. Many are outstanding operators. But our investment model is built around scalable technology, not operationally heavy local rollouts.

Questions Founders Should Ask

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

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

If the answer is yes, we’d love to hear from you.