Invest in Syndication
Like real estate syndication, we pool investor capital and buy a website or e-commerce business with a clear plan to either fix and flip within 18 months or buy and hold for 5+ years.
What is a Syndication in Business?
In business, syndication is the process of combining resources from multiple parties, such as financial institutions or investors, to fund a specific project or investment opportunity.
Syndication is commonly used to finance large-scale projects, including real estate developments, movie productions, or startup companies.
Who is Involved in a Syndication?
Syndication involves multiple parties, including an active sponsor who manages the syndicate and negotiates the deal, and other investors or financial institutions who contribute funds to the project and remain passive and not involved in the management of the business.
Why Do We Do a Syndication?
- We find that the best price range to acquire online businesses is in the mid-six to low seven-figure range ($500,000 to $2,500,000).
- These businesses are well-established, have lower risk and we identify clear growth opportunities compared to micro businesses and bigger middle market businesses.
- The costs to manage these bigger businesses are a lower proportion of revenue compared to sub $500,000 businesses, allowing us to allocate extra resources to scale them and make them much larger.
- We are able to sell them to strategic acquirers for much higher multiples once we have crossed the $1MM EBITDA barrier.
- Most deals we do are private, through our own network and are not available anywhere else.
- 100% passive investment
- Different asset classes available to invest in
- You invest with proven managers & operators
- Higher diversification if you invest in multiple deals
- Access to larger deals not available to individual investors
- Syndications are not liquid investments
- Limited control over the operations of the business
- High carry fee (50%) once the money has been returned
How To Invest in our Syndication
We break it all down in deal structure and explain how we operate things.
- These are set up via a Delaware LLC or C-Corp, where the ownership will be proportional to the equity investment size.
- As sponsors, will also contribute 5% of the acquisition cost and will be the manager of the LLC/C-Corp.
- Investors are not required to be accredited and the minimum investment size is $100,000.
- Once investors have gotten 100% of their investment back, 50% of the upside will be distributed to the sponsor and operator.
- Example: $1,000,000 invested, $250,000 in distributions over the first two years, business is sold for $1,750,000, investors get $750,000 return of their capital first, then we split the remainder $1,000,000 between investors and sponsor/operator.
- We believe in decentralization with the right incentives for our operators, which means, every business has its own operational team with a CEO/Brand manager responsible for the P&L.
- Our operators utilize outsourcing as a core part of their strategy, which means we can run businesses much more cost efficiently and with more resources than previous owners.
- We raise enough capital for the operator to cover operational costs for the first 12 months plus any investment in growth.
The Bottom Line
Syndication is a powerful tool to fund these acquisitions because it provides investors with lower risk due to being able to diversify if they join different deals in different industries and business models like content or e-commerce and higher returns due to bigger deal size.