SPV Update For Investors And Interested Parties

Hi everyone,

The summer is in full swing, we just published our Q2 results, and as we are midway through August already, it’s time to give an update on our SPV JV results to date, plus a few other relevant updates.

I initially intended to write this update just for those who have already invested, but I know many people are interested in joining the SPV still, so I’m sending it to everyone (investors will still get a more detailed email in addition).

First off, how’s it going so far?

Pretty well!

We’ve acquired one business already, as mentioned in an earlier email, and have multiple more lined up to acquire.

The first of those is ready and we hope to close in the next couple of weeks. It got delayed by a couple of matters out of our hand that needed resolving first, and we expect that to take place in the next week, leaving us ready to complete the acquisition shortly after.

This one will be much bigger than the previous one and has a wider range of services, including: Branding, Digital Marketing, UX, Web Design, Email Marketing, and CRO.

It boasts a client list including Neil DeGrasse Tyson and Cornell Law, has a 5.0/5.0 rating on Clutch and comes with an all-star team.

Here’s a snapshot of their year-to-date financials. We have access to their quickbooks account as part of the due diligence, so these are live numbers:

There is a slight up trend as they’re on a $4.5M revenue run-rate while 2023 they had $4M in revenue.

So about a 10% growth trajectory. In fact it has grown in the past few months since we made our offer to them, but the offer hasn’t increased in value.

This makes our investment even better.

Also, notice there is a 54% gross-profit margin. In previous emails we’ve said we target 60%+ but most businesses are closer to 40%. This means we’re acquiring a high quality agency, but one with room to grow further.

What’s more, the business currently has a lot of demand from existing clients for SEO services, but does not currently have an SEO solution.

Luckily, Onfolio has a lot of SEO solutions we can offer them, unlocking growth for both the acquired company and our existing portfolio right from the beginning.

We hope to complete this acquisition September 1, ahead of the first SPV distribution September 30.

This business, coupled with the DDS Rank acquisition we made in June, will really get the SPV rocking, with some decent revenues, a big chunk of cashflow, and a nice growth trajectory.

As a reminder, it doesn’t matter whether you invest before this acquisition or after; the SPV investors are shared equally across every business in the portfolio.

You’re getting a diversified investment rather than investing in a specific business….

But!

The sooner you invest, the better valuation you will get.

As we start to acquire businesses that are growing, people who invest later on will not get the same valuation as early investors.

How about the previous acquisition?

We acquired DDS Rank June 24th, so July was the first full month that we owned the business.

We spent that month making sure we understood the business fully (you always learn new things once you actually get handed the keys), and creating a punch-card of things to take action on.

In the case of DDS, the short-term focus is on the email list, running promotions to previous clients, evaluating our prices (hint: we will put them up), and generally getting the team working more efficiently.

The previous owner did not do much marketing at all, relying solely on word of mouth. He has a list of previous customers, but no email software in place, meaning we should be able to generate extra revenue just be running a re-marketing campaign over the next few weeks.

We’re pretty bullish on how much growth we can unlock in DDS in the near-term (which is another reason future investors will see the valuation higher).

Overall, July was a solid month and the business earned about what we anticipated.

There weren’t any clients who churned after the acquisition, or any unexpected expenses. It was one of the smoothest migrations we’ve ever had in all honesty.

What’s next?

Aside from the aforementioned acquisition we’re looking to complete, we have 2-3 more businesses lined up. We need anywhere from $500k to $1M to complete those acquisitions, so we will be expanding the scope of the SPV and raising more than the $2.5M originally targeted.

Given the increase in capital, the fact we’re acquiring more businesses, and the fact there’s already some growth, we will increase the valuation of the SPV, but only after a certain period of time.

The way that works is that one share of the SPV is currently valued at $1, but in October it will increase to $1.25 to $1.5 per share.

This shouldn’t mean that future investors get lower returns, because they will still be investing at the same earnings multiple as people who invest now.

It just means that since the earnings are growing, people who invest sooner will capture more of the upside.

Or put another way, those of you who invest in the next few weeks, plus those of you who are already in, will see some upside much sooner than you might have expected.

Think of it like an early-bird discount.

If you’re interested in making an investment now, you can visit onfospv.com and clicking the “invest now” button at the bottom of the page.

You can also view our deck on that page.

Got questions?

Feel free to hit reply.