Case study · Marketplace
Tradelane proves a marketplace can reach liquidity
Tradelane connects independent retailers with small wholesale brands. Buyers reorder stock every month; Tradelane keeps a share of each order. The founders, Sofia Novak and Ben Arkwright, had real traction but a first model that would not have survived a partner meeting. This case follows them from first draft to a closed seed round and a working monthly routine.
- Starting point
- 300 active buyers, about $186k of monthly GMV, $300k in the bank, 5 people
- Seed round
- $2M
- at $10M pre-money
- Series A (plan)
- $6M
- at $32M pre-money
What this case teaches
- Model revenue as your take of GMV, never GMV itself.
- Marketplace churn and order frequency need cohort evidence, not SaaS rules of thumb.
- A Worst case that runs out of cash in month 6 is a timing problem: start raising earlier and have a bridge ready.
- Why raising more than the Raise Planner minimum can be the right call.
The starting point
Eighteen months after launch, Tradelane had a product retailers liked and a cash problem.
Buyers placed about 1.2 orders a month with an average order of $450, and Tradelane kept 10% of each order. With 300 active buyers that meant roughly $186k of GMV and $19k of net revenue a month, growing on word of mouth and a small paid test.
The company had $300k left and burned around $35-40k a month. The Runway & Burn tab showed the problem plainly: the lowest cash point came in month 3, just before the seed was planned to land. Any slip in the round would leave very little room.
What the founders brought to the model
| Input | Value | Source |
|---|---|---|
| Active buyers today | 300 | Marketplace database, ordered in last 30 days |
| Orders per buyer per month | 1.2 | Trailing 6-month average |
| Average order value | $450 | Payments data |
| Take rate | 10% | Seller agreements |
| Monthly buyer churn | 6% | Buyers inactive 60+ days, cohort data |
| Paid CAC per buyer | $150 | Paid test: $9k spend, 60 buyers |
| Cash in bank | $300k | Bank statement |
| Team | 5 (2 founders, 3 hires) | Payroll |
The first draft, and what the Self-Audit caught
The founders' first version looked great and was wrong in three ways. Each one would have been found in diligence.
| Mistake | First draft | Fixed version | Impact |
|---|---|---|---|
| Revenue was GMV | Revenue = total order value (about $5M in year 1). | Revenue = GMV x take rate ($0.5M in year 1). | Revenue fell by 90%. Presenting GMV as revenue is one of the fastest ways to lose an investor's trust. |
| SaaS-style churn | 3% monthly churn, copied from a SaaS benchmark. | 6% a month, from 'inactive for 60 days' cohort data. | Year-3 buyers fell, but the plan became defensible in diligence. |
| Payment costs ignored | Gross margin of about 95%. | Payments cost 2.2% of GMV (22% of revenue at a 10% take rate) plus $2 of support and trust cost per order. | Gross margin settled at 70-75%, which is still healthy for a marketplace. |
The lesson
Every one of these errors made the business look better. Investors know marketplace models well; overstated revenue or margins end conversations quickly. The Model Self-Audit Workbook and the Health Score flagged all three before the first meeting.
The plan, after the fixes
Revenue grows from $0.5M to $4.4M by year 3, which means about $51M of annualised GMV at an 11% take rate by the end of year 3. EBITDA turns positive in month 35, and on the planned funding cash never runs out. The lowest point is $192k in month 3, the month before the seed lands.
Gross margin moves from 70% in year 1 to 75% in year 5, and the team grows from 9 to 30 people.
Sizing the raise
The Raise Planner suggests the minimum. The founders chose a larger round for reasons they could explain. The Raise Planner shows about $1.3M of equity is needed to reach month 21 with an 18-month runway and a $150k cushion, rounded up to $1.5M. Sofia raised $2.0M. The reasons: in the Worst case cash runs out in month 6 if the round is late; marketplaces often take longer than planned to reach liquidity in new regions; and a Series A at month 20 needs buffer in case it slips.
Where the money goes
| Category | Share | Buys | Unlocks |
|---|---|---|---|
| Product & Engineering | 34% | 3 engineers incl. search & payments | Repeat-order tools, buyer app |
| Supply growth | 16% | Supply Partnerships Manager + onboarding | 600 active sellers |
| Demand marketing | 22% | Paid acquisition to retailers, trade shows | 6,000 active buyers |
| Marketplace operations & trust | 10% | Ops manager, fraud & dispute tools | Disputes below 1% of orders |
| G&A & Operations | 8% | Finance, legal, payments compliance | Series A-ready books |
| Infrastructure | 3% | Cloud, payments platform fees | 99.9% uptime |
| Contingency buffer | 5% | Slower liquidity, fundraising delay | 2+ months extra runway |
| Recruiting & hiring | 2% | Recruiting fees and onboarding | Team of 16 by month 18 |
Cap table and ownership
Before the seed, Tradelane had two post-money SAFEs ($125k at a $5M cap and $375k at a $9M cap) and a 1.2M-option pool. The SAFEs convert at the seed: the accelerator's low $5M cap gives it a larger slice than its cheque suggests. Both founders together go from about 87% to 64% after the seed and about 52% after the Series A.
What the founders would tell you
- Revenue is your take, not the volume flowing through your platform.
- Use your own cohort data for churn and frequency, and say how you measured them.
- If the Worst case runs out of cash before the round lands, the fix is timing and a bridge plan, not a prettier forecast.
- Raise more than the minimum when you can explain why, in numbers.
Not covered on this page
The full case also covers the Health Score review, the downside plan, the financial slides they built, the investor questions they rehearsed and their monthly routine after closing.