Digital marketplaces - the relevance of small TAMs and why they are becoming investible

Just weeks after Oakley Capital Investments investment adviser Oakley Capital agreed the successful exit from southern Europe’s leading property portal idealista, we dive into the sector to look back at past successes and look ahead to where we see opportunity.

Since its inception Oakley has been investing in and helping to grow successful consumer digital platforms and marketplaces. We typically identify leading players in developing local markets, teaming up with ambitious founders and management teams to accelerate growth. Lessons learned in the firm’s earliest investments in these sectors have been applied to fresh opportunities, demonstrating the repeatability of Oakley’s investment strategy and Oakley's ability to source opportunities in new regions, especially those with comparatively low digital penetration rates.

Oakley also supported Verivox’s investment in offline advertising including TV ads to build brand awareness. Revenues increased by over 165% over six years. Verivox was sold to ProSienbenSat.1 in 2015, generating a c.15x gross MM return.

In 2014, Oakley built on its experience with Verivox to invest in another price comparison website, this time applying its experience and lessons learned to a new country with comparatively lower digital penetration rates- Italy. For instance, at the time of Oakley's investment just one in 10 Italians switched car insurance online, vs. c. 80% in the UK.

Oakley sold a majority stake in the business in 2018 and currently retain a minority position. Since Oakley's investment ten years ago, Facile has grown revenues by 18% CAGR and EBITDA by 25% CAGR.

Parship Elite’s partnership with leading Germany media company ProSienbenSat.1 helped to deliver a revised brand and media spend strategy, leading to EBITDA increasing at a 43% CAGR between 2015 and 2017. 16 months following Oakley's investment, Oakley sold a majority stake to ProSienbenSat.1, generating a 4.7x Gross MM and 118% IRR.

Cementing its position as a leading investor in European online platforms, in 2017 Oakley invested in Casa.it, the #2 real estate classifieds platform in Italy, carving it out of its listed parent company and supporting the management team to improve the technology and commercial offering. In 2021 Oakley merged Casa.it with idealista to create the leading property portal across Southern Europe. This was a highly strategic combination where Oakley executed on the founder’s vision to reshape the Italian market by joining forces with idealista to create the leading property portal across southern Europe including Spain, Italy and Portugal. idealista’s EBITDA grew by a CAGR of 21% during Oakley's period of investment, before Oakley exited its stake in 2024, generating a 2.1x Gross Money Multiple.

These successes have ridden on the back of the consumer shift to online, which accelerated during the pandemic and which is fast becoming the most important sales and marketing channel for most businesses. It is also down to increased trust and familiarity, as consumers feel more comfortable transacting increasingly complex products and services online: no-one thinks twice now about buying car insurance online.

The success of these businesses has also been down to another important feature which, interestingly, is becoming less relevant as the world goes online  - size of total addressable market (TAM). Companies such as idealista, Facile have relied on massive, underlying markets, such as energy, property or insurance- which provide products and services that are essential to economic growth and the proper functioning of society. 

However, we believe that large TAMs or ‘total addressable markets’ are becoming less important. As the digitalisation of many sub-sectors has accelerated, Oakley's sector mapping and research has begun to unveil attractive & sizeable opportunities in a multitude of sub-sectors that have a much smaller TAM. Because digital penetration has advanced so significantly, today we can see sizeable players (€50-€100+ million revenues) in attractive niche markets, such as pets, recreational sports and home services.

The bottom line is there are now more attractive, sizeable pockets of growth in the consumer sector than ever before, offering outsized growth potential, and Oakley is seeing this increasingly reflected in their opportunity pipeline.