- Empowering Accredited Investors with Passive Investment
Opportunities in Alternative Digital Assets
- Strategic Buy-Grow-Sell Model Focused on Online Businesses
- Diversification and Risk Mitigation through Sectoral and
Geographic Spread
- Minimal Capital Requirements When Compared To Private
Equity
WILMINGTON, Del., July 11,
2024 /PRNewswire/ -- WebStreet is currently raising
funds from accredited investors for its eighth investment fund,
having seen modest returns in its previous rounds.
Launched over three years ago as a spinoff of the highly
successful and widely regarded #1 marketplace for online
businesses, Empire Flippers, WebStreet—formerly known as Empire Flippers
Capital—is reshaping the landscape of private equity by focusing on
one forgotten alternative asset: online businesses. Leveraging a micro private equity model,
WebStreet connects accredited investors with high-potential digital
ventures, aiming to democratize access to its lucrative online
business investments.
"WebStreet is fundamentally about offering a completely
passive investment opportunity. Investors can choose funds based on
the historical performance and specific strategies of portfolio
managers." Kyle Kuderewski, Operations Manager at
WebStreet
The Investment Thesis
WebStreet's investment thesis revolves around a structured
buy-grow-sell model aimed at maximizing returns for its investors.
The process begins with the acquisition of undervalued online
businesses at attractive multiples. These online businesses—which
could be e-commerce stores or SaaS companies—are selected for their
robust operational histories and potential for substantial
growth.
Once acquired, these businesses undergo strategic management and
operational improvements to enhance their value. WebStreet
meticulously selects its portfolio managers based on their
extensive experience and specialization in specific niches.
Leveraging this expertise, the portfolio managers implement
targeted growth initiatives, optimize processes, and expand market
reach, all while maintaining a passive investment experience for
its investors. This stage is critical in transforming these
businesses into more profitable and scalable entities.
The final phase of the strategy involves the sale of these
enhanced online businesses. They target exits within a two to
four-year timeframe, aiming to sell at a premium to realize
significant returns. According to them, this approach not only
maximizes the potential for high returns but also provides
investors with liquidity in a relatively short period.
"It's a win-win for everyone involved—investors and portfolio
managers receive quarterly distributions and reports until the
assets are sold, ensuring a transparent and profitable investment
journey." Mohit
Tater, WebStreet
Portfolio manager
Risk Mitigation and Diversification
Each WebStreet fund typically includes 4 to 6 different
businesses selected from various sectors, such as e-commerce, SaaS,
and direct-to-consumer brands. This sectoral diversification spreads risk and allows
the portfolio to benefit from multiple growth drivers.
Additionally, the businesses are managed by different WebStreet
portfolio managers, each bringing specialized expertise and
regional insights, further enhancing the risk management
framework.
Also, by investing in online businesses that operate in
different regions, WebStreet minimizes the impact of localized
economic downturns and regulatory changes. This geographic spread
ensures that the performance of the overall portfolio is not overly
dependent on any single market.
Operational risk is mitigated through rigorous due diligence and
continuous performance monitoring. Before acquisition, WebStreet
conducts extensive evaluations of potential investments, assessing
financial health, operational efficiency, and market position. Once
part of the portfolio, businesses are subject to regular
performance reviews and strategic adjustments, ensuring they remain
aligned with the fund's objectives.
"I cannot build a deep enough skill base across all the
various monetization methods. Across ads, eCommerce, SaaS, Kindle
publishing… I, as an individual, cannot keep up to speed at the
depth that I would need to feel comfortable investing on my own.
So, pooling with other investors was very attractive for
me." Hannah Cui, 8-time WebStreet Investor, Former
Tech Executive
Detailed quarterly reports are provided to investors, giving
insights into the performance and strategic direction of each
business, enabling investors to make informed decisions and
understand the risk landscape.
Comparative Advantages Over Traditional Investments
Higher Return Potential
WebStreet targets digital businesses with substantial growth
potential, such as e-commerce stores and SaaS companies. These
sectors are known for their scalability and ability to generate
robust cash flows. The buy-grow-sell strategy employed by WebStreet
is designed to maximize these growth opportunities, often leading
to higher returns compared to the steady but modest growth
typically associated with stocks and bonds.
Cash Flow Generation
Unlike many traditional investments, online businesses can provide significant and
consistent cash flows. E-commerce and SaaS companies, for
example, often benefit from recurring revenue models and
high-profit margins. This strong cash flow generation is a key
attraction for investors seeking both income and capital
appreciation, offering a more dynamic income stream compared to the
fixed interest from bonds or the dividend yields from stocks.
"These are not hyped-up unicorn startups that could very
easily go to the moon and also very easily crash and burn. These
are under-the-radar, cash-flowing businesses. Online cash flowing
businesses." Stefan von Imhof, WebStreet Investor, CEO and Co-Founder of
Alts.co
Non-Correlation with Traditional Markets
Investments in online businesses tend to have a lower
correlation with traditional financial markets. While stocks and
bonds are heavily influenced by broader economic conditions and
market volatility, digital businesses often operate independently
of these factors. This non-correlation provides a valuable
diversification tool, helping to stabilize overall portfolio
performance and reduce vulnerability to market swings.
Scalability and Growth
Online businesses, particularly those in the e-commerce and SaaS
sectors, are inherently scalable. They can expand rapidly without
the physical constraints faced by traditional brick-and-mortar
businesses. WebStreet capitalizes on this scalability through
strategic growth initiatives, operational improvements, and market
expansion efforts, offering accredited investors the potential for
exponential growth within a relatively short timeframe.
Accessibility and Flexibility
WebStreet lowers the entry barriers for accredited investors by
offering investment opportunities in high-growth digital sectors.
This accessibility allows a broader range of investors to
participate in private equity-like returns, traditionally reserved
for institutional investors or high-net-worth individuals.
Additionally, the platform's structured approach provides
flexibility in capital deployment, allowing investors to tailor
their portfolios to their risk tolerance and investment goals.
"There's trust in the system…… In the process of what I've
seen in other areas that I'm counting on the team to follow through
and do." Chuck Mohler, Principal at Eagle Corporate Advisors and
3-time WebStreet Investor
For more information about WebStreet, visit www.WebStreet.co.
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SOURCE WebStreet