LODAS Markets’ Supply-Side Strategy: Solving the Marketplace Chicken-and-Egg Problem
Every marketplace startup faces the same fundamental challenge: how to attract sellers without buyers, and buyers without sellers. But when your marketplace deals in billion-dollar alternative investments, this challenge takes on a whole new dimension. In a recent episode of Category Visionaries, LODAS Markets CEO Brian King revealed their unconventional approach to cracking this perennial startup puzzle.
The Surprising Demand Discovery
Most marketplace founders obsess over demand generation, but LODAS Markets discovered an unexpected truth: institutional buyers were already there, waiting. “What’s been great for us is that we’ve been able to really attract a lot of buyside interest,” Brian explains. “That ranges anywhere from institutional investors, such as an insurance company all the way to a hedge fund or a PE equity firm.”
The Real Challenge: Supply
The true bottleneck wasn’t finding buyers – it was connecting with sellers. “The biggest initial hurdle that we had was being able to get supply. That means the people that are looking to sell, largely that hurdle for us was just getting people to know that we exist,” Brian reveals. This insight led to a complete rethinking of their go-to-market strategy.
Leveraging Institutional Appetite
LODAS Markets found a unique advantage in their buyers’ behavior patterns. “The institutional buyers that we have, they have a very specific appetite, meaning that in many cases, they have reserved or earmarked several million dollars for a specific product or asset class,” Brian notes. This concentration of buying power created natural liquidity pools that helped attract sellers.
Technology as Supply Catalyst
Rather than pursuing a traditional high-touch approach, LODAS Markets built technology that made selling frictionless. “We’ve made the process incredibly simple. Literally, somebody can set up an account in less than five minutes. But it’s all done through technology,” Brian shares. This focus on technological efficiency transformed what had historically been a weeks-long process into something that could be done in minutes.
The Financial Advisor Channel
A crucial insight came in recognizing financial advisors as a key distribution channel. Instead of trying to reach individual sellers directly, LODAS Markets built tools that helped advisors better serve their clients. “We’ve even created technology that allows that aids a financial advisor to be able to help onboard their clients to be able to sell,” Brian explains.
Building Market Awareness
With supply as the critical constraint, LODAS Markets focused on “getting people to talk about you because it is an interesting segment of the market to be able to enter into,” as Brian puts it. This approach to market education helped create awareness among potential sellers who previously didn’t know they had options for liquidity.
Results and Future Vision
The strategy has proven effective, with the platform now representing “somewhere between one and two billion dollars.” Looking ahead, Brian sees technology continuing to break down market silos: “Right now, everything works kind of in a silo and so to be able to connect to other institutions through technology and we’re just on the cusp of doing that now.”
For marketplace founders, LODAS Markets’ experience offers valuable lessons:
- Don’t assume you need to build both sides of the marketplace simultaneously
- Focus on removing friction for the constrained side of the market
- Leverage existing industry relationships rather than trying to displace them
- Use technology to transform traditionally high-touch processes
Most importantly, their journey shows that sometimes the conventional wisdom about marketplace dynamics needs to be questioned. By identifying and focusing on the true constraint – supply, not demand – LODAS Markets found a path to marketplace liquidity that others had missed.