Blue Ocean Investing – How You Can Gain Equity (And Profit) With WebStreet
Updated on April 23, 2024
Half a billion dollars.
Eleven years ago when we got started as two guys building Adsense sites, we could’ve never predicted that we’d go on to sell $500 million worth of online businesses through Empire Flippers.
Quite frankly, if you had even told us the idea we may have laughed in your face.
While we had a lot of drive to build sites, and eventually caught on to selling them, we were limited by only seeing the clear opportunities in front of us at any given time.
It was our audience, network, and customer base asking for (and demanding) better access to online business opportunities that led us to finally answer the call to create a marketplace.
See, that’s the funny thing about market demand. It tends to create a tidal wave much bigger than any of us can anticipate or imagine on one simple condition:
An unmet need has to be met.
That’s all we did when we started Empire Flippers. We made a marketplace for buying and selling online businesses possible when it was previously impossible. And $500 million in sales followed suit.
With WebStreet, we see the same trajectory and quite frankly – the market potential is likely bigger.
There was an immense unmet need to invest in online businesses without the risk of ownership or running the business. Out the gate, the market for those interested in passive investments eclipses the market potential of those interested in running their own online business.
So we gave it a shot – we built a fractional investing solution via WebStreet to see if this model would serve those wanting to break into the industry.
Answering the call to create fractional investing in online businesses has led to 15% cash on cash distributions in 2022, all in a down economy.
This is only the start for fractional investing in online businesses. The pent-up demand is already creating massive traction in our industry.
Now we are offering investors their next big investment opportunity and the chance to cash in on Webstreet’s tidal wave of growth to come.
Here’s the story of what led us to this inflection point, and how investors can become early adopters of an investing revolution.
Answering the Call to Make Investing In Online Business Accessible To All
We didn’t create an online business M&A marketplace overnight.
When we started out building those Adsense sites and blogging about them with a small, interested audience, it took us time to start selling those businesses. We started selling on another platform, but quickly switched to selling directly.
With time others wanted help selling their businesses and access to a buyer pool. More and more requests (demands) came in from our audience to have a piece of the business model we were carving out.
Slowly but surely, Empire Flippers was born. We grew, we pivoted, and repeated that process over and over to become the leading curated marketplace for buying and selling online businesses.
You’d think in those years of letting our customers and market form Empire Flippers we would have learned a lesson on responding quickly to demand.
In reality, we were a bit hard-headed to the vast potential right in front of our eyes.
Our audience and network asked quite clearly: give us a way to earn from online businesses without having to fully buy one ourselves. We want to invest.
We were handed a new venture and solution to our customer’s demands on a silver platter.
Yet, we were donkeys. Heels in the dirt to the potential in front of us, stubborn to make it happen. It took our audience, our network, kicking and screaming for us to REALLY get it.
When we saw a few parents come to Empire Flippers to buy their children businesses to teach them about entrepreneurship and give them an investment to earn from, that was our first sign.
They wanted to include their children in the asset class, however, the kids didn’t have the operational know-how to run the businesses. This showed us that people did need someone trusted to help with their acquired assets.
The final straw was personal. My Aunt had reached out asking for a chance to get involved with online businesses. She had the capital to invest, but didn’t have the skills to run her own business. That barrier to entry was too great for her to get in on the online business investment she really wanted.
Knowing her story and her situation personally made us realize there was a real need here. It was our light bulb moment.
It wasn’t just an Aunt or a few parents looking for help to run an online business and gain exposure to this asset class.
There was a huge market all facing similar problems.
There was an unmet need that had to be met.
A Blue Ocean in Online Business
No one else was offering a way for investors to own online businesses passively. It was a fairly straightforward solution that would tap into massive market potential.
With Empire Flippers, those who thrived on our marketplace had to be seasoned buyers and knowledgeable sellers.
Even though our marketplace received plenty of traction, that still cut out a ton of potential investors who had capital but not the time or skills to run online businesses.
That’s why we finally developed Empire Flippers Capital. It was our first iteration of matching talented online business Portfolio Managers (PM’s) with the capital necessary to acquire assets.
We strengthened our model for fractional investing and realized we could offer even better investment opportunities by expanding deal flow to all public and private deal sources.
That’s why Empire Flippers Capital rebranded into WebStreet, to be fully independent and open to a broader range of deals.
We’ve found this to be our sweet spot, not just for acquisition opportunities, but for really taking hold of blue ocean opportunities in online business.
Under WebStreet, ALL deals from any marketplace, including private deals, became available for investment. This meant our deal potential became as expansive as the market would allow.
Previously only accredited investors could participate in WebStreet funds. Currently, we’re testing crowdfunding options to allow a much larger audience of investors to participate with lower minimums.
With this change, the market opens to anyone who has capital and an interest in online businesses.
Therefore, we’re staring at a MUCH bigger market opportunity with WebStreet.
But to really go after that opportunity, we had to take a quantum leap. And find the capital to do it.
Launching WebStreet
When we launched WS we had a few critical questions to answer:
- Can we find investors?
- Can we find operators?
- Can we find the right businesses?
- Can we deliver solid returns to our investors?
Essentially, it was an existential question: can we really execute this wild vision and deliver on the potential we see in this space?
Even though we didn’t have all the answers, the investors were still knocking at our door and asking for a chance to buy into this asset class.
Investor demand powered our first three rounds of fractional investment. With Rounds 1-3 a solidified success, we reached the point where we needed to scale as a business to meet investor’s needs.
Cue our first direct raise of $2.8 million. We sold pieces of WebStreet to help us scale operations and the framework for online business fractional investment.
Investors understood that in order to get expanded access to fractional investing, you have to have the vehicle to do it. Their investment helped us bring on the necessary team to build out the structure behind WebStreet you see today.
With their backing we were able to tackle one of our biggest growth initiatives: separating from Empire Flippers to become our own entity.
The planned separation went smoothly. With no interruption to normal business operations we upped our full tech stack migration, grew our team, and expanded our deal sources off of Empire Flippers. Our deal flow multiplied and we were able to acquire strong businesses from new sources. Fully rebranded and formed as WebStreet, we put the structure in place to scale our $100M moonshot vision in deployed capital.
We’re forever grateful to our first direct raise investors. They took the same leap of faith that we took on ourselves.
We had all believed in, and bought into the potential of the asset class, even though the road (and our track record) was yet to be proven.
Investor Returns to Date
The performance of our regular investment funds is what makes WebStreet and the direct raise investment valuable.
In 2.5 years we have raised $27M+ for 34+ acquisitions and brought in 13 top-performing portfolio managers to actively run and grow assets for our 350+ investors.
We have closed 5 rounds of investment, with our most recent round closing with over $5M in funding.
Right now our investors are on track to earn over 20% returns, without having to be involved in any part of running the business.
Worth noting, all the traction we’ve made has happened in a down market. While most other asset classes were taking big losses in 2022, WebStreet has been able to deliver an average of 3-4% cash on cash quarterly returns.
The world has been navigating unprecedented uncertainty, and markets are fluctuating unsure of what’s next. In the thick of all of that, we still grew.
From nothing, we built out an investment class that other investment vehicles failed to deliver in this tumultuous environment.
We don’t say this to brag. It’s with full excitement that we look at this progress and go – “If this is what we are delivering for investors out the gate, imagine what we could do next?”
Investing in the Institution
Direct investment in WebStreet is a rare foundational opportunity.
Consider for a moment that fractional investing in online businesses is a little like horse racing.
Our best-in-class portfolio managers are like jockeys, pushing their online businesses to their absolute racing potential.
Their talent and strategy are what our investors bet on.
But in the case of investing directly into WebStreet, it’s the chance to own the race track. It’s the foundation of the entire race itself.
In direct terms: investing in WebStreet is to invest in the industry at large.
This is an opportunity to be an owner of a cutting-edge fintech platform. Investing in WebStreet has the same young, fast-paced energy as a startup. It’s an investment in growth (versus income) where investors participate in the upside of the business value as the business grows and eventually has an exit. The projected returns are significantly higher than returns in our typical rounds alone.
However, unlike traditional startup investing, WebStreet has the core advantage of an established track record, with proof of concept and product market fit.
Furthermore, there’s stability in this business model’s recurring revenue stream.
Not only does WebStreet take a 10% profit share or carry in all of the 33 assets under management, but we also have recurring fees based on assets under management.
Carried interest and assets under management fee revenue is very valuable because it is predictable, which is why asset managers like Blackstone, Apollo, and Bain Capital trade at high multiples.
So the way to think about owning an asset manager (which you will if you invest in WebStreet’s Direct Raise) is you will be entitled to our portion of profit share of all future and past deals and asset management fees.
Profit share in deals is referred to as carried interest, which is typically reserved for active fund managers and is hard to get access to as a passive investor.
In this deal, you can sit on the “General Partner” side of the table and get carried interest in all of WebStreet deals – a great way to get exposure to the entire portfolio of deals that we will do versus just investing fund by fund in our normal rounds.
Ultimately, this is a matter of owning a stake in a platform that is leading the charge to create a new investable asset class.
Details for Investors
It’s an incredible opportunity, for the right investor.
Investing directly into WebStreet is not for those looking for liquid investments. This is a non-correlated growth investment opportunity, not an income (cash flow) investment like our normal portfolio manager funds.
What does that look like?
Investors are buying a minority stake in the form of preferred equity. WebStreet will invest ALL the capital raised from the sale into growth. The founders and previous investors are not taking any chips off the table, and future earnings from fees and carry are expected to be reinvested into growth as well.
When there is an exit, preferred equity holders (direct raise investors) recoup their initial investment first and cash in on the increased value based on their ownership.
In this uncontested blue ocean market, there is much opportunity to capitalize on. We are offering a pure play growth investment in ecommerce and online businesses.
To invest in the institution means you can profit off of meeting the unmet need the market has long been calling out for.
The opportunity is in plain sight, the structure and traction is there. All that’s left is to decide whether you want to own the foundation powering a new asset class.
Join Us
Think back to our initial conversation about stumbling into half a billion dollars of market share.
Imagine if we had opened up Empire Flippers to direct investment. All of the wild growth we were able to realize in those 11 years could have equated to equity, and a piece of the industry at large.
We can’t change the past but we can create the opportunity now.
Direct investment in WebStreet is available in June 2023. Investment is simple, with a click of a button you can start the process to learn more.
Join us as a partner today. Our team is available to answer all your questions about owning a piece of WebStreet.
Disclaimer: Past performance is not indicative of future results. Investments may lose value, and you should consider the investment objectives, risks, charges, and expenses of any investment carefully before investing.