Building a successful startup from the ground up will always involve some level of creative problem-solving and business savvy. But knowing how to build a startup that’s also an online marketplace comes with its own set of unique challenges.

When I asked how he engineered an online marketplace that fulfilled both supply and demand needs in the construction industry and successfully raised $25M in capital, Jiyan Wei, Cofounder of BuildZoom, shared with us some great strategies that could be applied to many startups.

Among them, he gives us his most valuable tip for developing tech, shares the top things investors are asking and thinking when you are delivering a pitch and how to get into the world of startups and online marketplaces yourself.

The challenges of building an online marketplace

BuilZoom was born out of need. 

Jiyan and his cofounder had both had terrible experiences with past construction projects and came together to lament -- then solve -- their problems:

Quality identification and supply/demand matching.

However, before raising capital for their startup, they had to find a viable solution for this problem. And they initially built much of their online marketplace ecosystem themselves.

They didn’t originally set out asking, “How do I build an online marketplace?” 

They started by creating a solution to the problems they encountered when doing their own construction projects.    

They intimately knew and understood where the gap was in the marketplace, and simply started by creating an index of licensed contractors in the United States.

Later, they expanded that to be a matching service.

Unlike other startups, an online marketplace needs to have a solution for both the supply and demand of a service or product in order to be successful. If that is executed well and works -- the concept will work.

You can build more sophisticated features and improve the user experience as your startup raises more capital and your team grows.

If your startup has already been through some funding rounds, one challenge might simply be remembering to go slow with development.

“There’s a temptation -- especially when you have engineers and capital -- to build everything out right away. But you can start with something very simple and see where your users are spending their time.”

And then there’s answering the question:

How does an online marketplace make money?

This is important to know not just when raising capital for a startup but also when knowing how and where to put your resources. All founders must make the decision of which features they want to spend time developing and which ones can wait for subsequent funding rounds or future product iterations.

For their online marketplace’s revenue model, BuildZoom focused on an important part of the construction process: pre-construction. 

Being in their customers’ shoes themselves, they knew the value of having a project plan in place and a couple of very qualified contractors to choose from. 

They now have a paid service that delivers and manages this process. Their own in-house construction professionals work directly with building owners to manage the bidding process and vet contractors submitting bids.

How to build an online marketplace: Jiyan’s top tip

The best way to build an online marketplace -- or any tech startup -- is to start with a minimum viable product.