Two types of business models have penetrated the website investing space as of recently. They are website investment funds and website holding companies. Onfolio, managed by Dom Wells, is a dedicated website holding company that invests in online businesses.
This article will cover in an interview format what Onfolio is up to, why they are offering preferred shares and their criteria for investments.
Let’s get into it!
Onfolio is headed by Dom Wells. If you’ve been in the industry long enough, you know that Dom Wells was the former owner of Human Proof Designs, an agency catering to niche website builders. He exited that company to start Onfolio.
Onfolio started as a website operator with a buy and manage service. They recently launched their holding company.
13 Questions with Dom Wells, CEO of Onfolio
What’s the structure of your business?
We’re a Delaware C Corporation.
Why did you choose to give Preferred Shares vs creating a fund?
Preferred shares are just one element of the business. The real question is, why did we choose to form a holding company vs creating a fund. That question is easy. We wanted to build a significant business and media empire, where acquisitions were a key part of that business model. With a fund, we’d just be capital allocators, mostly responsible for managing other people’s money. By forming a holding company, and taking that company public, we can build a significantly larger company which translates to more wealth for ourselves AND our shareholders.
When we first went down the holding company path, we issued common shares and raised money from them. However, our common shares don’t come with a dividend, and a lot of people are attracted to this space for cashflow. As such, we decided to conduct further raises by offering a fixed 12% dividend preferred share.
How much money are you ideally looking to bring in?
We have 1,000,000 preferred shares available, for $25/share, so we are raising up to $25M.
How large is your team managing the fund?
There are just under 30 of us operating the various businesses in our portfolio.
Who is your ideal investor persona? Do they need to be accredited?
US Investors need to be accredited, international investors don’t, though local laws may apply to them. Our ideal personal is somebody who is looking for above average returns, with less risk than usual in the internet marketing space. In addition, as it’s a fixed income dividend, it probably doesn’t appeal to people looking for upside or speculation. It’s better for someone who has money sitting in the bank making zero interest, who is looking to put that money to work long term.
Investors can check out this page to learn more.
Do you source private website deal flow? If so, how?
We have built a good reputation as reliable buyers, so people typically come directly to us. We don’t do a lot of outbound work for dealflow presently, though this may change.
Do you buy mostly private or use brokers for website deal flow?
We are agnostic to where we buy from. The most important thing is buying the best business for a reasonable price. When that’s your philosophy, you’ll go wherever those businesses are. So we buy from private, from our network, and from brokers or marketplaces as we see fit.
What’s your criteria for purchasing a website? What do you look for?
The first criteria is to buy an online business, not just a website. When you shift your thinking that way, a lot of average websites suddenly don’t qualify, which makes your life easier.
If you’ve seen how much Google has changed over the last 18 months or so, you’ll be worried about how unstable the average “website” is. Even the best website could suddenly lose all its rankings overnight. Not a scalable way to grow an empire.
Now we look for something that has more meat on the bone. This could be a huge email list, an engaged audience, a community, customers, repeat buyers, anything that helps you think of this as a real business and not just a random website.
Beyond that, sure, you have to do the usual due diligence, but that’s probably beyond the scope of this particular question.
How many sites do you purchase?
We currently own or manage about 30 businesses, but as we’re a holding company and not a fund with a finite life, there’s no need to define how many we’ll buy.
How diversified are the traffic and revenue sources for each site?
I probably answered this above already, but we try to make them as diverse as possible. Really though when you buy a business and not a website, these things are already taken care of.
What’s the criteria to make you decide to sell a website?
Selling isn’t part of our long term strategy, so really we’d only sell a business if we don’t like its long term prospects.
Do you have other competitors in this space?
That really depends. Are our competitors other holding companies, or the businesses that compete with our portfolio? If it’s the portfolio, I’m not going to list them all out here. If it’s other holding companies, I guess they are only our competition for dealflow or for investment dollars, in which case, we don’t have any competitors who are doing exactly what we do.
What’s next for Onfolio?
In Q3 or Q4 this year we will become an SEC reporting entity, and will then complete a public listing on the OTC markets in the US, making us a “public company”. For the meantime, we are continuing to raise funds and build our warchest.