SPV Update

Hi everyone,

I just sent the following email update to the SPV investors, and figured I’d also send it to the wider list of non-investors and fence-sitters too.

I hope you are winding up for the holiday season well.

As we head into the final weeks of the year, I wanted to give you an update on the progress with the SPV so far, and some insights into expectations in 2025.

Overview on the portfolio

To date we have acquired two businesses. DDSRank in July and EasternStandard (ES) in October.

They are similar in some regards, and very different in others. 

They’re both agencies, they both offer marketing services to other businesses, but DDS Rank is on the smaller side, with about $400k/year in revenue, and a small team of freelancers. ES on the other hand boasts around $4MM per year in revenue, 3 co-founders who are staying on, and a much larger team.

Both of these things come with operational challenges, and we’ve been managing the transition while also laying the foundations for 2025.

In practice, when you first take over a company, the “transition” at a low level is migrating accounts, becoming more familiar with the existing team, and making sure everything is working as intended. At a higher level, it’s a balancing act of making sure the new team adapts to new ownership, finding holes in the org chart, and making strategic decisions moving forward.

Strategic decisions can be anything from raising prices to improving service quality and back end operations.

DDS Rank

For DDS Rank, I wrote quite a lengthy update about our plans a couple of months ago, which you can read here. 

DDS Rank had a bit of employee attrition since I wrote that, so things took a month or two longer to get into motion, but they’re on track now. November saw our highest month net income so far at $17,271 and that is not as a result of seasonal promotions as Black Friday isn’t really a thing in this particular sector. 

We’re targeting having about that much in recurring net income by the end of Q1, and growing throughout the year from there, with additional one off sales throughout each month bringing the net income above $20k.

I think the biggest success so far with DDS Rank is creating a long to do list of things that will add value and growth to the brand, and finally getting the team ship shape enough to start implementing those items. 

Overall, DDS Rank has proven to be a decent acquisition, and as we’re roughly at the halfway stage in its first year, I would say we are out of the transition/migration period and fully in growth mode, which is excellent news.

Eastern Standard

For Eastern Standard, it’s only been about 6 weeks since we took over, so we’re much earlier on in the process. Not only that, but ES has more moving parts to migrate. This is a team that has employment contracts, needs to be onboarded to HR platforms, and a company that has institutional clients requiring contract assignments to deliver work.

In terms of operations, the ES migration is much smoother than DDS Rank because we brought along the very talented management team intact, and all their account reps and contractors to boot. 

Our goal with ES is to 

a.) Help them onboard or cross-sell new services 

b.) Help them build more of a sales pipeline and 

c.) where possible, utilize cheaper overseas talent as the team expands (this doesn’t mean come in and fire the “expensive americans”, it means when new hires are needed, use our experience with remote teams to help them find talented contractors for a fraction of the price).

For A and B, we are already underway with those items. Helping agencies solve a demand generation/leadflow problem is a big priority of ours, as the majority of agencies for sale suffer from this problem.

In plain English it means, build systems to help agencies get more prospective clients, then go out and acquire more agencies with the same lack of prospects.

Every agency owner is great at sales, but not necessarily great at lead-gen.

We’re currently working with a company that we may even end up acquiring one day to build a system of ES and other agencies of ours, and we’re optimistic about starting to see results as early as Q1. 

How’s the rest of the SPV pipeline and fundraise going?

I’ve spoken at length about the two acquisitions we’ve done so far, and I think they’re going well. 

In terms of what the rest of the SPV looks like, we have some good news! 

We have two more acquisitions we’re working on, hopefully to close in Q1, and have just completed a raise of around another $1M via some partners whose audiences were very receptive to our raise. 

I’ll keep their identity a trade secret, but essentially we JV’d with some people who have investor audiences, and cut them into Onfolio’s profit share of the JV. This doesn’t impact SPV investors, but opens up much more capital to the SPV, which is great for everyone.

We think we should be able to raise another $1m or more in Q1 with them, and aim to do a similar raise every quarter in 2025. 

This means that I can focus more on acquisitions and operations, and less on fundraising, and the SPV can fulfil its promise of acquiring half a dozen or more businesses in the first year (even if it takes longer than expected, this is still great progress).

I will likely spend less focus on raising from my own audience, but existing investors such as yourselves are always welcome to put more money in.

It was probably strange to see me raising aggressively for the SPV in the first half of the year, then relatively silent since the summer. This was because I was working on pitch decks and webinars with the new partners, and focusing on landing the ES deal.

So, overall I think the SPV has been a great success to date, and we have made some good initial progress. 

If you’re not yet in the SPV, you can join here.

Feel free to reply to this with any questions. 

I look forward to sending the January update (I expect the books will close around the 20th of January so look for that update in the final week of Jan).

Hope you all have a great holiday season and a happy new year. 

Here’s to 2025!