The WMarketplace is raising a Crowd SAFE at a $10.5 million valuation. That’s a rather steep price for a marketplace. The median valuation for marketplaces was 13x revenue as of 2021, with Etsy among major standouts at 16x. Based on first-year revenue of $175,000, The WMarketplace is raising at a 60x revenue-to-valuation multiple, much higher than the industry average. Plus, The WMarketplace doesn’t benefit from any proprietary technology that would merit a higher price. With this relatively non-differentiated product, The WMarketplace’s price is too high.

Because The WMarketplace is an e-commerce hub for almost any type of product or service under the sun, its theoretical addressable market size is huge. For physical goods alone, the US e-commerce market is expected to hit more than $875 billion this year. The growth rate also seems to be pretty healthy, with the global market expected to climb 14.7% each year between 2020 and 2027.

Of course, The WMarketplace’s realistic obtainable market is much smaller. The marketplace doesn’t offer anywhere near Amazon’s diversity of products, and prices are much higher for specialty goods created by small, women-owned businesses. Etsy might offer a more reasonable comparison. Etsy generated more than $700 million in revenue in 2021. If The WMarketplace could achieve even 10% of that revenue, it would be a tremendous success.

The WMarketplace was founded by CEO Kate Isler and CMO Susan Gates. Isler is a seasoned executive who worked her way up the ranks at Microsoft over the course of 11 years. At the end of her tenure, Isler was a senior director of global campaigns and advertising at the software giant. Since leaving Microsoft, Isler has led two companies: a healthcare startup and a women-focused nonprofit. Isler also published a leadership book with HarperCollins in 2021. 

Gates has more than 20 years of sales experience. She worked her way up through various roles in the beverage industry, most notably as a national account executive for the Specialty Coffee Association. Gates holds a master’s degree in international affairs from Columbia University. 

This co-founding team has deep experience in sales and marketing, with a dash of entrepreneurial experience on Isler’s resume. Those are strong qualifications to build this type of consumer-focused marketplace business. It’s worth noting that The WMarketplace team lacks technical leadership that could accelerate the company’s ability to convert customers and provide sellers with industry-standard management tools. However, this capability could be added to the team over time. Overall, The WMarketplace is led by a strong founding duo that offers a compelling story of women’s leadership and entrepreneurship to burnish The WMarketplace’s brand. 

The WMarketplace’s biggest weakness is lack of genuine differentiation from the wide variety of other online marketplaces. The company’s most obvious distinguishing feature is its focus on women-owned businesses. However, customers could easily shop with this preference on platforms like Etsy by simply being choosy about who they purchase from. It would also be easy for a company like Etsy to add a “women-owned business” filter to its search results. 

At the end of the day, consumers have a huge number of options for e-commerce shopping. New social media trends, including the rise of TikTok, have made it easier than ever to discover new small businesses and patronize them directly. It’s not clear whether The WMarketplace has enough differentiated sticking power to last in the competitive e-commerce landscape.

The WMarketplace launched in September 2020, so the company has a little more than a year of operating history to evaluate. Within that year, the company seems to have enjoyed a good deal of traction. It generated $175,000 of revenue in its first 12 months in business, which is impressive for a relatively generic marketplace. Nearly 500 sellers are offering goods and services on the platform, and The WMarketplace has garnered more than 200,000 impressions since its launch. 

The WMarketplace also touts its success in securing strategic partnerships with entities across a range of industries. However, it’s not really clear how these partnerships benefit the business model. A range of government programs, banks, and media organizations are apparently affiliated with The WMarketplace in some way. Among these are KeyBank, Women Owned, and Hello Sunshine. 

While The WMarketplace has a long way to go before becoming a mainstream marketplace for women-owned businesses, early signals indicate that there is a group of consumers eager to back female-led brands.

The WMarketplace is a relatively low-risk investment because the marketplace is already live and generating revenue. Even if the company didn’t make any more improvements to its tech platform, sales could theoretically continue bringing in income to sustain the business. The largest source of risk with this investment opportunity is deal terms. The WMarketplace is raising at an overinflated valuation that increases the likelihood that investors won’t reap a quality return. 

The WMarketplace has a noble mission to empower women entrepreneurs by connecting them with value-driven consumers who want to support women in business. However, consumers already have a wide range of options to patronize women-founded businesses. It’s already easy to find women-owned shops on marketplaces like Etsy. If e-commerce giant Amazon saw market demand for women-led businesses specifically, it could easily add the capability to filter for only those businesses in search results. Moreover, The WMarketplace’s overly broad focus on all types of goods and services makes it that much more difficult for the company to market to a core niche of consumers. While The WMarketplace has enjoyed early success, it may be difficult to scale interest in a non-differentiated marketplace like this one. 

The WMarketplace isn’t very well differentiated from other marketplaces, and the products and services available on the platform could be found elsewhere. Nonetheless, The WMarketplace has enjoyed success in its first year in business. It’s clear that there is a core of consumers who care passionately about patronizing women-owned businesses, and The WMarketplace team has clearly done a good job marketing to members of that audience and converting them into customers. With $175,000 in revenue in the first year and almost 500 sellers, The WMarketplace has cleared the common marketplace hurdle of building both supply and demand. 

In addition, the long-term prospects for The WMarketplace seem strong given the founders’ skill in creating a value-driven, women-focused brand. Both founders are deeply experienced in business, specifically sales and marketing, which is a huge asset for their company. But beyond those hard skills, they also offer a compelling face for the brand. CEO Kate Isler has already built a name for herself as a leader and women’s empowerment convener, with a women’s community business and management book under her belt. These founders’ capabilities have led The WMarketplace to its current promising position.

The WMarketplace is a marketplace where value-driven consumers can shop for products and services sold by women-owned businesses. Investors should note that The WMarketplace is overpriced, with a valuation derived from a revenue multiple much higher than average. Investing in any company that is priced above its current level of traction is a risky proposition. The company’s focus on supporting women-owned businesses is also not highly differentiated, as other e-commerce marketplaces could begin offering a similar focus.

However, more consumers are choosing to spend according to their values and buy from small businesses rather than faceless corporate giants like Amazon. The WMarketplace fits right into that trend and has already built a compelling brand with two seasoned women leaders at the helm. The company’s market opportunity is large and growing, so obtaining even a small share could count as a success. The WMarketplace has generated decent revenue in its first year in business and seems primed to continue growing with additional sellers and buyers. Therefore, The WMarketplace has been rated a Deal to Watch. 

For questions regarding the KingsCrowd analyst report or rating for this company, please reach out to [email protected]. 

Analysis written on April 1, 2022.