We see this as the most attractive business model – once a business has won market share dominance (network effect driven), the economic payoff is staggering.

Often also fueled by the increase in internet and mobile penetration and the print to digital dynamic.

Variety of revenue models: advertising, fee to sellers etc.

Very attractive financials at maturity; 40%+ EBITDA margins, ROIC 20%+. Examples in search, property, travel, car, etc.

Extremely hard to disrupt once established, very strong market share, often with clean balance sheets, and recurring revenue.

We prefer to back the #1 player in these markets; the #1 player gets most, #2 gets some of the returns.

Leads to product entrenchment, high switching costs, and also often supported by a strong brand reputation.

Often operating in a very large TAM with significant user bases and the ability to sell and upsell over time (increase ARPU).

Requires substantial levels of capital investment, but this creates a high entry barrier which deters potential competitors.

These scale and physical barriers often lead to natural monopolies and economies of scale.

Balance sheets for these companies may have higher levels of debt however these are often manageable via very stable, long-dated and durable cashflows.

Often leads to a large and diversified customer base, and recurring revenue.

Crucial across a wide range of industries such as credit scoring, energy, data and more.

Many industries are subject to strict regulatory requirements and standards. Compliance is not only necessary but is often a legal requirement.

Often requires specialized knowledge, skills, or equipment. This creates a barrier to entry for new competitors, allowing established companies to dominate the market.

Repeat business and ongoing contracts contribute to a stable revenue stream.