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The Income Store Part Deux?

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lludwig

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Hey all (especially @MJ DeMarco ) look what just popped up in my inbox.

Empire Flippers is doing this:


Is it The Income Store part Deux?

Wealth Without Skill​

You’re a high net worth professional investor, but you’ve been forced to watch from the sidelines when it comes to the returns online businesses can provide because you simply don’t have the skills required to run one.

You might even scroll through our marketplace looking at all the assets for sale, wishing you could get involved, but you just can’t pull the trigger due to the skill gap.
 

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MJ DeMarco

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Maybe, I'd think they'd be aware of what happened there. But I see the same sales pitch.
 

biophase

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I just looked further into this. I think this is very different than IS, but still has its challenges. So far, what it looks like to me is that there is a "proven and vetted" entrepreneur that has some experience in a certain area.

So let's say a person has FBA experience, built and sold a business for $1M. Now this person is looking to purchase 1-3 FBA stores for up to $5M and is raising money. I think the main difference is that you have one designated person running your investment. I don't know how the equity part works but I'm guessing the main person running the store is getting a decent percentage and therefore wants it to succeed.

It would be like me raising $5M to purchase an ecom business where I get 25% and the rest of the investors get 75% and are passive.
 

MitchC

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They are members here maybe they can chime in if they are still active? It won’t let me tag them but here’s the original thread

 

empireflippers

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Hey all,

Justin w/ Empire Flippers here. Happy to answer any questions you all might have about EF Capital.

I'd start by saying this is different from the Income Store (fiasco) in a number of ways. The similarity is that it involves investment in online businesses from passive/silent investors, but you'll find something similar with companies like Thrasio, Perch, and the dozens of others joining the space in the last 2-3 years.

Here are the differences:

1. Expert Operators - Rather than having one team run a host of different monetization and business models, we've identified and selected experts at each with solid experience and a track record.

2. No Black Box Investment - There isn't a pool of funds being used to run all of the businesses/portfolios. Each operator will have their own distinct pool of funds. These are closed-end funds, meaning no additional money will be put into the pool. (Opening any pool up to a Ponzi, paying older investors with newly injected money)

3. Transparent Finances - All investors in each fund will see exactly where the money went, where it was spent, and the profits distributed. In fact, it's our intention to publicly share a limited version of this data to the public, pending legal approval.

4. No Guarantee Of Returns - For pretty obvious reasons - it's not sustainable. These are high-risk, high-reward investments and requires any/all investors to be accredited. Even investors outside the US have to meet the same standard. Frankly, we don't know how these investments will perform, but we've A) Selected operators who have a track record of success and B) Are optimistic based on modeling we've done and the other funds I linked to above.

While the industry is still quite young, we've seen significant growth and early signs of more sophisticated investments in the space. We look to industries like Real Estate for examples as to where we think things are going and believe these are some of the first steps being made along the way.

We've put quite a bit of thought and effort into this in terms of legal requirements, conflict issues, incentive alignment, etc.

That being said, we're sure there will be bumps on the road, adjustments made, and problems/issues we didn't foresee.

I know there are smart, capable entrepreneurs and investors here - would love any feedback you all have for us as we move forward!
 

ljean

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Investors are taking 93% of the risk but only getting 60% of the profits. I like the concept but seems a bit one-sided to me.
 

lludwig

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Hey all,

Justin w/ Empire Flippers here. Happy to answer any questions you all might have about EF Capital.

I'd start by saying this is different from the Income Store (fiasco) in a number of ways. The similarity is that it involves investment in online businesses from passive/silent investors, but you'll find something similar with companies like Thrasio, Perch, and the dozens of others joining the space in the last 2-3 years.

Here are the differences:

1. Expert Operators - Rather than having one team run a host of different monetization and business models, we've identified and selected experts at each with solid experience and a track record.

2. No Black Box Investment - There isn't a pool of funds being used to run all of the businesses/portfolios. Each operator will have their own distinct pool of funds. These are closed-end funds, meaning no additional money will be put into the pool. (Opening any pool up to a Ponzi, paying older investors with newly injected money)

3. Transparent Finances - All investors in each fund will see exactly where the money went, where it was spent, and the profits distributed. In fact, it's our intention to publicly share a limited version of this data to the public, pending legal approval.

4. No Guarantee Of Returns - For pretty obvious reasons - it's not sustainable. These are high-risk, high-reward investments and requires any/all investors to be accredited. Even investors outside the US have to meet the same standard. Frankly, we don't know how these investments will perform, but we've A) Selected operators who have a track record of success and B) Are optimistic based on modeling we've done and the other funds I linked to above.

While the industry is still quite young, we've seen significant growth and early signs of more sophisticated investments in the space. We look to industries like Real Estate for examples as to where we think things are going and believe these are some of the first steps being made along the way.

We've put quite a bit of thought and effort into this in terms of legal requirements, conflict issues, incentive alignment, etc.

That being said, we're sure there will be bumps on the road, adjustments made, and problems/issues we didn't foresee.

I know there are smart, capable entrepreneurs and investors here - would love any feedback you all have for us as we move forward!

But as a prospective investor, you leave out the most important part... the domain name, site, and company name. No way to do independent due-diligence from what I can tell looking at the current offerings. That's a big red flag.

This is one aspect of your service I hate with your regular offerings. I have to go through hoops for even your normal offers just to find info about the domain. I'm clearly qualified to buy these sites (financially and experience), but I have to requalify myself every so often. It's a horrible process.

Your current auth isn't even working properly even if I scanned my passport and driver's lic. It's broken and just gave up after multiple tries.

Frankly makes the whole process not worth my time and a big disincentive. I'm a buyer/investor with the money but yet makes it very difficult to find a deal to my liking. As a marketplace, you should help facilitate transactions not make them more difficult.

On top of the existing offers I have seen, feel are priced to perfection for the seller. Since you are a seller-dealer you are incentivized to do so. This is no different with this new offering.

As someone else commented previously, this sounds like this offering is too much risk and not enough return. As with any investment you are competing against other investment options and my dollars will just go elsewhere even if it means lower returns.
 
Last edited:

empireflippers

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Investors are taking 93% of the risk but only getting 60% of the profits. I like the concept but seems a bit one-sided to me.
Someone else brought this up to us too:

"Why give 30% to the Operators when they're only putting in 7% of the capital?"

It's an incentive issue. If the Operators don't have enough incentive, we won't get the best Operators. We had many discussions with Operators and potential investors and this seemed to be the best starting point.

Truth be told, the plan is to INCREASE the Operator's leverage once they've built a solid track record with EF Capital. Bumping it to 5X - 7X leverage is potentially where it's going.

Additionally, this is completely passive for the investors. If they don't want to give up any additional profits for the increased risk, their best bet is to buy/run the businesses themselves. Some will choose that route, I'm sure. Others don't have the time/skills to do so and this may be a better option for them.
 

empireflippers

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Mar 1, 2013
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239
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Ho Chi Minh, Vietnam
Frankly makes the whole process not worth my time and a big disincentive. I'm a buyer/investor with the money but yet makes it very difficult to find a deal to my liking. As a marketplace, you should help facilitate transactions not make them more difficult.

On top of the existing offers I have seen, feel are priced to perfection for the seller. Since you are a seller-dealer you are incentivized to do so. This is no different with this new offering.

As someone else commented previously, this sounds like this offering is too much risk and not enough return. As with any investment you are competing against other investment options and my dollars will just go elsewhere even if it means lower returns.
I'm sorry to hear you're having difficulties verifying your information through our system. I know that many are verifying just fine - not sure what's going on with yours? If you want to private message me your name/info I can look it up.

Have you ever setup a call with our team? It's pretty easy and they're responsive - can get you setup straight away and avoid whatever automated issues you're having there.

Regarding the brokerage - you're right in that we're optimizing the value for the seller. That's our main goal. We're not shy about the fact that we're trying to maximize every dollar we can out of the buyer for the properties we're selling. It's one of the reasons we're able to attract high-quality listings/sellers. On the brokerage side, we'll be doing the same with Operators purchasing the businesses. It's their responsibility to negotiate and select the best listings for their particular strategy.

Happy to setup a call if you need it to better understand what we're trying to do here. If it's just not for you, though, I get it, no worries.
 

biophase

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But as a prospective investor, you leave out the most important part... the domain name, site, and company name. No way to do independent due-diligence from what I can tell looking at the current offerings. That's a big red flag.

This is one aspect of your service I hate with your regular offerings. I have to go through hoops for even your normal offers just to find info about the domain. I'm clearly qualified to buy these sites (financially and experience), but I have to requalify myself every so often. It's a horrible process.
I've only had to sign up and qualify myself once and I've had access to listings for nearly a year. You can always just email and ask for more unlocks when you are almost out.
 

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