Website Investing Funds Vs Operators - Domain Magnate

Website Investing Funds Vs Operators

Website Investing Funds Vs Operators

For new website investors who lack the operational expertise, there are two main options for investing in websites: to hire an operator, or to invest in a fund.

Option A: Website Investment Fund 

Online businesses are a relatively new asset class with very high margins and returns. However, these assets require a high degree of expertise and hands-on involvement that may not be immediately obvious or feasible for most investors. 

A Website Investment Fund is a vehicle for pooling investor capital to grow and exit websites to within the fund time horizon. 

Should You Invest in a Website Investment Fund? 

But is investing in a website fund a good fit for you? Why invest in a website fund over other more traditional investments? 

Investing in a website fund offers the twin benefits of diversification against google updates, and not having to hire an operator and team to manage the assets yourself.

Richard Patey, founder of the Website Investing publication Tweet

What are the benefits of investing? 

The checklist

  • Are you looking for high returns (even if that means higher risk)? 
  • Are you looking for a passive income? 
  • Are you looking to diversify your types of investments?

Why invest in a website fund? Ask yourself these questions to see if it could be a good fit for you. 

Are you looking for high returns (even if that means higher risk)?

Perhaps you have been searching for a way to make higher returns than traditional investment funds such as real estate or the stock market. If so, a website fund could be an ideal option as they tend to have potential to generate significant cash flow. You should bear in mind that alongside high pay-offs, come higher risks that can cause unexpected fluctuations in revenue. But risk is a big part of investing. And if you proceed with caution and a good understanding of the possible market risks, there is no reason it can’t pay off.   

Are you looking for a passive income? 

If you are looking for an investment opportunity that involves very little involvement and stress, this could be a great option for you. Funds are very passive (the fund operator will take care of the operations), which means you can avoid the high-stress and time-consuming role of managing digital assets yourself. 

Are you looking to diversify your types of investments?

Do you already have investments in more traditional areas like stocks or real estate and would like to diversify? Or perhaps you are already involved in website funds or building websites, and would like to gain exposure to a different type of business model? If any of these sound like you, a website fund might be well-suited to you. The performance of digital assets will be largely unrelated to the stock or real estate market, allowing you more peace of mind over your assets. Diversifying into different classes of digital assets means you minimize risk, should the market for one particular type of site be affected.  

Are you the right candidate to invest? 

The checklist

  • Are you an accredited investor?
  • Do you have experience operating digital assets?
  • Do you understand the risks?

Now you know WHY you should invest. It is time to determine whether you are actually an appropriate candidate to invest in a website fund. Ask yourself these important questions.

Are you an accredited investor? 

This one’s a biggie and there’s not really a way around it. Most website funds only accept accredited investors. If you have made previous investments as an accredited investor, you will already know that this means you meet certain criteria of a $200 or $300,000 yearly income or net worth of $1+ million. Unless you meet these criteria, you may not be able to invest in securities not registered with the US Securities and Exchange Commission (SEC).

Do you have experience operating digital assets?

They say stick to what you know. Are you a website operator yourself? Or have you been involved with running a digital business in the past? If so, this makes you a great candidate to invest in a website fund as you will be able to identify the best funds, and scrutinize their strategy to make sure it is fool-proof before signing up. 

Do you understand the risks?

There are many risks involved with digital assets and many of them are unpredictable and more volatile than conventional investment funds. Many sites’ revenues are dependent on social media algorithms, third-party commissions, or the business fluctuations. These things can undergo sudden updates and changes that are out of your control. Make sure you understand these risks before jumping in. 

How to choose a Website Investment Fund? 

What to look for in a fund 

The checklist

  • Do they have a solid strategy? 
  • Is everything legal?
  • Is the cash flow high enough?
  • Does their acquisition strategy minimize risk? 
  • Are they transparent with reporting?

So you are on to the stage of choosing a website fund. But what do you need to look for and what do you need to avoid? Ask yourself these questions to do due diligence on any fund you are considering. 

Do they have a solid strategy? 

There are many different types of strategy. These will define timeframes for investing investor capital as well as cash flow generated. When choosing a fund, you want to make sure that the operational strategy makes sense and fits with your goals. 

Fund A, for example, might choose to reinvest all capital and cash flow to scale the business over the course of 1 year. This means their investors will wait at least one year to get any return on their cash. However, the extra cash spent means they are likely to see bigger returns within that timeframe. Fund B, on the other hand, may choose slower growth, paying their investors dividends right away from the cash flow generated. Either of these strategies can work, it just depends on your goals.

As a rule of thumb, if you can wait, do. It can often generate more revenue in a shorter space of time. 

Is everything legal?

It is important that the investment fund you choose is fully above board and abides by all U.S. SEC laws and regulations. While the fact website funds are still in their infancy is new and exciting in some respects, on the downside, it means that the legal documentation behind them is less clear and non-standardized. This can be confusing so make sure you check the legalities twice before jumping in.  

Is the cash flow high enough?

One of the upsides of a website fund is the fact is can generate large amounts of cash flow. This means you should be looking for a fund with a high return. Returns from a traditional investment like a stock market fund average around 6% to 8%. Therefore, as a website fund has higher risks attached, anything less than this is not worth it.  

Does their acquisition strategy minimize risk? 

Buying and running a portfolio of sites runs a large number of risks. Think Amazon cutting their commissions in 2020 which caused a huge revenue hit to many Amazon affiliate sites. Therefore, it is vital that whichever fund you choose must have a strategy in place to minimize risk. For example, diversifying revenue sources so the portfolio is not over-reliant on one method.  

Are they transparent with reporting? 

When investing in a fund, you want to know where your money is going. And that it is being used wisely. Is the fund open and transparent about every deal in their portfolio? Do they offer regular reporting on day-to-day expenditures and investments for growth? Quarterly reporting is ideal to allow you to keep track of your investment. You will know exactly where your money is going and allow you to be confident in the fund’s strategic decision-making. It is also a good chance to learn more about the industry.

DOMAIN MAGNATE FUND

Domain Magnate Capital is actually our very own Website Investment Fund with a highly targeted approach for high-potential assets. It is run by owner and CEO, Michael Bereslavsky, who has over 15 years experience in the industry buying, selling and improving websites. Domain Magnate Capital is our third fund launched since 2020.

Our team of experts specializes in acquiring lower-value digital assets with large potential for growth We then work on these, aiming to achieve a 50%+ return on capital invested for every asset in our growing portfolio. We like to keep our investors in the loop, providing quarterly reporting, updates on profit and loss, as well as an overview of our strategy plans.   The fund is open now and actively accepting investors. 

What to look for in a fund operator 

The checklist

  • Do they have a strong background?
  • Do they have an experienced team?  
  • Can they handle scale?
  • Have they invested in their own fund?

So next it is important to do due diligence on the fund manager. This will be the person in charge of day-to-day operations and the overall success of the fund. How do you vet the fund operator? Ask these questions. 

Do they have a strong background?

Checking the track record of the fund operator is the first important step. Ask to see proof of how they have scaled the business, the past deals they have made, what their greatest successes have been, as well as their biggest failures. 

Scrutinize their strategies for minimizing risks on deals, discover why past deals succeeded or failed and what they took away from the experiences. Unexpected issues will arise. You need a fund operator who is ready to make quick decisions, minimize damage and take the business forward no matter what. 

Do they have an experienced team?  

When we talk about website funds we are usually referring to a growing portfolio of sites. This means there will need to be a team of people working on everything from operations and acquisitions to SEO and content. Research the key team members, as well as the manager, as these will be the people indirectly in charge of your money. Are they experienced professionals, do they have a positive track record?

Can they handle scale?

A website fund is all about scale. Website revenues should grow and the number of sites should too. However, does the fun have the infrastructure in place to handle bigger deals at a scale? Some people start as solo operators managing a few sites from home. Have they got a structure and staff in place to handle the rapid growth that will come with investment?

Have they invested in their own fund?

Finally, a good way to vet the fund owner or operator is whether or not they have invested capital in their own fund. This does not only show trust in their own skills and commitment to the fund, but also it gives you some collateral that they won’t just up and leave at a moment’s notice.

Vetting a fund manager is a similar process to vetting a website operator. Website operators are all-in-one managers who typically run all aspects of a niche content website. If you already own digital assets or are thinking of acquiring one, there are many reasons why you might hire a website manager. Read on to read our detailed guide on website operators below. 

What are some recommended funds I can invest in now? 

The checklist

  • Domain Magnate 
  • Empire Flippers 
  • Onfolio Dividend Fund

So if you got this far, then it is time to start investing. But what are some reliable and lucrative website funds to get started with right away? 

Domain Magnate

Domain Magnate Capital is actually our very own Website Investment Fund with a highly targeted approach for high-potential assets. It is run by owner and CEO, Michael Bereslavsky, who has over 15 years experience in the industry buying, selling and improving websites. Domain Magnate Capital is our third fund launched since 2020.

Our team of experts specializes in acquiring lower-value digital assets with large potential for growth We then work on these, aiming to achieve a 50%+ return on capital invested for every asset in our growing portfolio. The fund is open now and actively accepting investors. 

Empire Flippers 

Empire Flippers quickly made their way to being one of the biggest names in the online M&A and site investment space. They have already launched  6 funds for content and FBA sites, each with a separate operator. This allows investors to diversify funds across 6 different operators.  

Empire Flippers is a well-oiled machine, with cherry-picked operators with excellent track records. They request a minimum of $10,000 for investors, while operators pay brokerage fees to EF. Operators must also hold the site for a year before selling. 

Discover investor opportunities in the Empire Flippers Fund here.

Onfolio Dividend Fund 

Onfolio Dividend Fund is managed by Dom Wells, ex-owner of Human Proof Designs. Their dividend income fund targets assets with high potential for growth. Their fund promises a yearly return of 12% on investment. This will be paid out over 5 years. Investor capital is spread across the entire portfolio. The simple, steady 12% structure is straightforward and is a little more like investing in a conventional real estate fund. 

Discover investor opportunities at Onfolio here.

Option B: Hire a website operator

A website operator is either an individual or a company that knows the ins and outs of running a content website. They should focus on the day-to-day operations of the site, but always with a focus on growth and increasing revenue. 

A website operator should have the skills and expertise to manage and scale any niche content site so that— whatever your reasoning— you don’t have to. Outsourcing asset management to a third party is ideal for hands-off investors, website owners and owner-operators that lack time or enthusiasm, or investors that need some help scaling their digital asset. 

What kind of things can a website operator do for you?

The checklist 

  • Manage content – this can include finding and managing teams of writers, content planning, editing and publishing, on-page and off-page SEO
  • Performance optimization – including traffic, CRO (Conversion Rate Optimization)
  • Revenue growth – including diversifying revenue sources, revenue negotiation
  • Maintenance – this can include basic maintenance of the server and hosting 

Most website operators are all-rounders and will take care of all these things for you. Especially if they are an agency, as they will usually have a team of experts to cover each of these fields. 

Should you hire a website operator? 

The checklist

  • Do you want to acquire a website but have someone else operate and grow it?
  • Do you want to acquire AND operate a website but outsource management or tasks down the line?

If you are considering outsourcing your site’s management to an operator ask yourself these questions. 

Do you want to acquire a website but have someone else operate it?

Hello hands-off investors, this one is for you. So you want your piece of the website investment pie but don’t want to be bogged down with the day-to-day operations? The solution may be passing the management of your asset over to a site operator as soon as you sign the dotted line. 

Don’t be fooled though, you still need to understand how content sites work, particulars about your niche, traffic and revenue sources, as well as the related risks. This will help you choose a suitable content manager to successfully take on the job. 

Do you want to acquire AND operate a website and then outsource management or tasks down the line?

Are you someone who already has experience both acquiring and managing websites? Are you an investor who likes to spend some time running a new acquisition solo? Many people like to run their asset for a period of time to gain an understanding of the business, industry and growth opportunities. However, once this is achieved, it might be time to bring in a website operator. 

This can free up time for you, and it also makes it easier to choose the right operator. If you want to keep a more hands-on role in the business, you may choose to outsource only certain tasks. Instead of choosing an ‘everything’ operator.     

When to outsource website operations

The checklist 

  • You are looking for passive revenue
  • You are bored managing your site 
  • You want more time for other opportunities 
  • You have got all the knowledge out of the site you can
  • You generate sufficient revenue to afford an operator 

You may be considering taking on a website operator but don’t know if it is the right move for you at this time. Ask yourself these questions to see if you are ready to take the leap.

Do you want a passive revenue stream? 

You are looking for a hands-off investment. The idea was never to be bogged down running the day-to-day yourself. If so, a website operator can take the stressful and time-consuming operations on for you. You will have to sacrifice some revenue or equity in the form of your operator’s fees, but if freedom is what your after, it is well worth it. 

Are you bored managing your site? 

If you are not passionate and focused on your website, performance is likely to fall. If this happens revenue will reduce and your asset might not grow as you hope. If you feel de-motivated or bored, it might be time to hire a website operator. 

If you feel like you are no longer interested in the business, you might also consider selling and moving onto something that lights your fire. 

Do you want more time for other opportunities? 

You enjoy owning and managing a site, but it is taking up too much time. Your whole schedule seems to be full with day-to-day tasks leaving you little time for any other business opportunities. If this sounds like you, hiring a website operator could be the answer to keep growing your asset AND free up the time you need for new projects.

Have you got all the knowledge out of the site you can?

You know your website inside out and everything is going smoothly. You have explored all growth opportunities. What now? There is a world of knowledge in other niches or site models waiting to be discovered. You have a few options; stay as you are, sell and move on, or hire a website manager and take on an additional investment. 

Do you generate sufficient cash flow?

Before hiring a management service or operator, you need to assess whether the associated costs make sense for the asset. Do you have enough cash flow coming in to sustain an operator? If the answer is yes, then it could be a logical next move. 

How to choose an operator

The checklist

  • Do they have a strong track record? 
  • Do they have solid references?
  • Are they transparent about their costs?

Hiring a website operator is of vital importance to the success of your business growth. Do not rush this step and make sure that they tick the following two key boxes. 

Do they have a strong track record? 

Ideally, the website operator you choose will be an established player in the industry. Have they successfully managed sites before? And can they prove it? 

Make sure that the operator you choose has experience and expertise in all the tasks listed in the checklist at the start. Some VAs may claim to have worked managing sites, but they will not necessarily have the full set of skills you need.  

Are there any public case studies available that you can look at to show how they grew business in the past? If not, can they walk you through examples of successes and managing previous sites? 

Do they have solid references?

References in the investing industry are a sure-fire way to vet a website operator’s abilities. Can any of their current clients, past clients or key industry players vouch for this person? What did they achieve for them? Having references helps greatly when choosing the right candidate.

Are they transparent about their costs? 

Transparency is important when you are putting your trust in an operator to run a digital asset. Are they open about all costs and plans? This is a good marker that they have both the organization capabilities and strategic proficiency to keep everything running smoothly and grow the business. Look for an agency or individual who is happy to provide consistent timely reports.

How to structure your partnership 

The checklist 

  • Offer a fixed fee 
  • Offer a reduced fee and equity
  • Offer no fee, only equity 

So while a website operator can bring great benefits, they do of course come at a price. There are several main ways you might choose to financially partner with your website operator. These can range from paying a pre-arranged flat fee, offering equity in the business, or a combination of the two.

Offer a fixed fee 

One of the most typical ways to compensate a website operator is with a fixed fee. This works like any traditional employee agreement, where you will pay them a fixed amount to take care of the daily, weekly and monthly operations of the business. While they will be concerned with growing the business, any increases or decreases in revenue will not affect their salary. 

Offer a reduced fee and equity

You may find that some operators may be interested in growth equity in the business. If so, they may be willing to work for a lower fixed fee in return for equity. If this is something you are interested in you will need to first determine an average baseline, for example, the average revenue over a 6 month period. For any excess revenue above this baseline, the operator will be paid based on their equity share. Bear in mind they will also need to be paid their share of sale profit if you decide to sell.

Offer no fee, only equity 

Finally, with the right partnership, you may decide to forgo the fixed fee altogether. This will be a risk for a website operator, who will be taking a risk on the business making profit. This can be a good sign that your operator is dedicated to making the business a success as without it they won’t get paid. 

Some people may also offer to help you grow your business for free if you are an authority in the industry. The ethicality of this is debatable. And while you may choose to take someone up on their offer, if they are willing to work for free, there are fewer guarantees that they will bring in good results.  

Tip:

Offering bonuses for hitting revenue milestones is a great way to incentivize your website operator to push for growth 

Who are some trustworthy website operators?

When contracting a website operator, there are two main categories to choose from; agencies or solo operators. 

Agencies 

Domain Magnate 

If you want to go down the agency line, the first people we can vouch for are (time for a shameless plug) ourselves, Domain Magnate. Having been in the business for 15+ years, acquiring, running and growing hundreds of sites, we offer an all-round website operating services. As well as investor opportunities in our latest Website Investment Fund. We specialize in growing low-value digital assets with big potential; exponential growth is our aim for any site we take on. Our team of experts in everything from SEO to marketing have helped every site in our growing portfolio see consistent returns over 100%.

We like to be fully transparent with our site operations, keeping you informed with regular reporting on day-to-day expenditures and growth strategy. This means you can have peace of mind that your asset is in good hands.   

Buzzlogic.com

Buzzlogic offers top-notch management services for content-based sites like affiliate, advertising or lead gen. They certainly know what they’re doing; their team of entrepreneurs has successfully grown all the websites in their portfolio and can do the same to yours. They promise significant revenue increase in just the first 2 months, and they have a streamlined and trustworthy process.

They have flexible packages with either a monthly flat fee starting from $2,500, as well as optional equity. 

Check out their services here.

Solo operators 

What if you don’t think you need an all-inclusive website management service? If you want to be involved in some areas of your site day-to-day but not others, you may prefer to contract individuals to perform specific tasks. These might be things you find particularly boring or time-consuming. Or alternatively, if you have ops covered, you could get expert help on the growth side. 

Either way, it is possible to hire an individual website operator who is responsible for those tasks you have agreed. A solo operator may be able to perform a number of different tasks for you, but usually not the full package. This will usually work out significantly cheaper than a fully elaborated monthly retainer with an agency. 

On the ops side you might hire someone to perform content management, SEO, conversion optimization or manage social media. 

On the growth side, you may contract an individual for help with innovation, testing CRO techniques, exploration of monetization opportunities, renegotiating commissions. 

Should I hire a solo operator?

The checklist

  • Do you have specific tasks you need assistance with? 
  • Do you have a deep and clear understanding of site operations? 

Before you go ahead with this method, it is advisable that you have spent some time fully getting to grips with all aspects of day-to-day operations and growth opportunities. This way you can identify the key tasks you need help with and pass them over smoothly. 

Next steps  

So what to do next? It’s time to determine whether you really need a website operator, and if so, whether you prefer to go with an all-inclusive management service or a solo operator. And then all that’s left is to choose the right one for your business.