WebStreet Unveils a New Investment Thesis: Micro Private Equity Model

• 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.

SOURCE WebStreet