Why You Should Invest in Web Properties

Investing in websites

If I could show you how to get a 25%+ annual return on investment, would you be interested?

If you could have control over the performance of that investment, would you be interested?

Of course you would!

Please forgive the sales tactics — I had to get your attention.

I discovered a new alternative investment when I started working with Latona;s Web property brokerage. Let me just reveal that I am working in the capacity of a business analyst for Latona’s — I am not a sales rep. However, I get to look at each website that is listed by the company. I get to ask the probing questions. I get to view all the weaknesses and identify the opportunities.

And I am impressed by the potential websites have as investments.

Here are some things you need to know:

  1. Many websites make their money primarily from the advertising displayed on the site. Yes, you know websites have advertising, but did you realize how much money?
    1. I recently worked with one site that had advertising revenues of more than $1 million with approximately $800,000 left over after expenses. The site attracts more than 1 million unique visitors each month and has been chugging along very profitably for nearly 2 decades.
    2. Average sites that attract 1,000+ unique visitors monthly often earn $50,000 to $100,000+ annually with expenses lower than 10%
  2. Most websites sell for between 2X revenues and 4X EBITDA.
    1. That means your investment can pay off in 2 to 4 years, if you just maintain the status quo.
    2. Most of these Web properties can be improved to increase traffic and advertising revenues.
  3. There is a growing population of venture investors who are investing in and improving Web properties — and they are making big money.
    1. The investment benefits of Web properties has not been recognized by the mainstream — yet.
    2. The investors operate portfolios of Web properties, keeping some for revenue, improving others and then selling them at higher prices.
    3. Investors either outsource management to inexpensive offshore companies that do excellent work, or they maintain an in-house management team — usually fewer than 5 contractors for the biggest portfolios.
  4. Online advertising is growing.
    1. Here is the headline from the IAB’s October 2014 press release announcing the results of the first half 2014:

      Digital Ad Revenues Hit Landmark High in First Half — High of 2014, Surging to $23.1 Billion, According to IAB Internet Advertising Revenue Report — Mobile Jumps 76% Year-over-Year & Overtakes Banner Ads

Yes, there are caveats. Working with a reputable Web property brokerage and doing your due diligence is, as you would with any venture investment, is the best way to protect your money.

Financing is often available, but the process of buying a Web property is negotiable. Often the current owners will accept payments over time. The asking price is negotiable. The terms are negotiable.

This is a young investment marketplace, which means that there are plenty of opportunities! As mainstream investors continue to seek alternatives to bonds and stocks, they will eventually find Web properties. When that happens, these properties will become more expensive.

If you have questions about investing in Web properties, or selling your developed website, please feel free to contact me through LinkedIn.

Be careful – The New Reality in Funding Land

I have seen a lot of dealflow recently. All kinds of Web and mobile hopefuls. Some good, most merely hopeful. What I am not seeing is a lot of money chasing these companies. I am also seeing a lot of dealflow in metals recycling, mining, industrial eco-chemicals, and they are at least seeing lookers. However, money is getting either scarce or wary.

My latest pitch to my clients centers around lean company tactics and bootstrapping if at all possible.

Here are three articles that pretty much sum it up:

 
Venture investors still have a healthy appetite for early-stage consumer Internet companies, but those startups are having a harder time raising follow-on financing.
Overall the amount invested in consumer information services was off 42% in the first nine months as the difficulties of newly public Internet companies such as Facebook and Zynga cast doubt on the business models and valuations of social media companies.
 
So what has changed in the past couple years? A lot, actually.
1) the consumer web has matured. we are almost 20 years into the consumer web and we have large platforms that are starting to suck up a lot of the oxygen. google, facebook/instagram, amazon, microsoft, apple, twitter, ebay, yahoo, AOL, craigslist, wordpress, linkedin together make up a huge amount of the time spent online, particularly in the english speaking world. there are still occasional new entrants into this list and departures too. tumblr and pinterest have risen a lot in the past couple years while myspace has declined. but consumer behaviors are starting to ossify on the web and it is harder than ever to build a large audience from a standing start.
 
http://pandodaily.com/2012/11/28/the-series-a-crunch-is-hitting-now-have-we-even-noticed/ I’ve been hearing about the so-called Series A Crunch for at least six months,and in recent weeks, I’ve spoken with more than 20 venture capitalists, angel investors, incubator heads, lawyers, and other necessary cogs in the ecosystem trying to get some details about it. Everyone — to a person — says it’s a real phenomenon. And everyone gives the exact same explanation of why it’s happening.