Investment Notes: Flippa

21 September 2021

OneVentures is delighted to be leading the AU$15M Series A round in Melbourne-based Flippa.com, the go-to global marketplace to buy and sell online businesses.

Flippa co-founder Mark Harbottle (L) and CEO Blake Hutchison (R). Image credit: Flippa

It has never been a better time than now to start a digital business. Period.

Platforms such as Amazon, WordPress, Shopify and Substack have provided us with the toolkits to start selling products and services to anyone connected to the internet.

The creator economy has also gone into hyperdrive, with platforms such as Instagram, YouTube and TikTok providing an immense global audience for the 50 million content creators to showcase and monetise their craft.

When the pandemic struck last year, the entrepreneurial side of humanity shone through, with a massive uptick in new businesses launching. In the US alone, there were close to 4.5 million new business applications, which is 50% higher than the prior 10-year average. Of these businesses, the vast majority were in retail, and unsurprisingly non-store or eCommerce (e.g. built on Shopify, Amazon, WooCommerce, Squarespace etc.).

US New Business Applications, US Census Bureau Data
US Retail Subsectors New Business Applications

Whilst exciting, this sudden rush of digital entrepreneurship is not a new trend. There are millions of online businesses, and while some of them will of course fail, many of them go on to be very meaningful in scale and profitability.

So, what then happens to the rest of these businesses? Not every successful company goes onto IPO or gets acquired by a large strategic acquirer or private equity firm.

Instead, online businesses are fast becoming a highly sought-after asset class, with more than US$7b raised by ‘Amazon Aggregators’ such as Thrasio, Heyday and Perch over the past 18 months — fueling rapid acquisition of microbrands on Amazon. Individuals are taking notice too, as part of a broader investing movement. There has been a fundamental cultural shift towards investing, equity and ownership, culminating in the Gamestop/Robinhood saga, TikTok ‘finfluencers’ and the crypto/NFT mania.

A 9–5 job at a Fortune 500 company is old news. Newly minted graduates aspire to join the next hottest start-up, launch their own companies, or become investors themselves.

People are realising that trading time for money is an inefficient way to make a living, and owning equity and assets is the best way to achieve financial freedom. Oftentimes getting started is the hardest part. We’re betting that before long, buying, running, and selling digital businesses as a side hustle, part of a larger portfolio or as a career change, will soon become commonplace.

In light of these wonderful trends, I’m so thrilled to announce that OneVentures has led Flippa’s AU$15M Series A as they continue to create pathways to exit for millions of online business owners.

Flippa is the #1 global marketplace to buy and sell online businesses and digital assets, including Shopify and Amazon eCommerce stores, content sites, mobile apps, SaaS companies and more.

Introducing Flippa.com

Flippa was founded in Melbourne in 2009 by Mark Harbottle and Matt Mickiewicz. If their names sound familiar, they are serial marketplace entrepreneurs, having also founded Sitepoint.com, and 99designs, a former Accel company. Long before our investment, Flippa invented this form of digital commerce, and amazingly has built a clear leadership position in this category, completely bootstrapped.

Flippa enables entrepreneurs and digital business owners to list their assets for sale and connect with the world’s largest community of buyers and sellers, with over 3 million registered users.

On the platform, interested parties can browse listings, communicate with the seller, negotiate a price, and of course make payment. Flippa also makes diligencing an online business a much easier process, with a trove of data available (e.g. website traffic, ad revenue, transaction history) through their integration partners. Over the past year, they’ve also added additional services to streamline the sale process, including acquisition finance to fund part of the purchase through partner Yardline Capital (a Thrasio company), as well as legal templates and services.

The team at Flippa have created a seamless and trusted platform for buyers and sellers to transact.

Historically, the sale of a business is a tedious process often taking months and requiring investment bankers or business brokers to find interested buyers. Advisors are also often unwilling to accept smaller transactions, due to the effort required to get a deal done.

Why we love it

We think that every successful digital business owner, big or small, should be able to monetise their asset when they decide they no longer want to run it. The universe of potential buyers for digital businesses is gigantic, and this verity is core to our investment thesis.

Flippa has the incredible ability to create global network effects, as potential buyers for an online business can be located anywhere else in the world.

This contrasts with many of the most well-known and successful marketplaces, such as Uber and Zillow, that create hyperlocal network effects through a critical mass of demand and supply in a focused region. Although the majority of Flippa’s transactions occur within the US, there are many examples of international and institutional buyers from places like Israel, UK and India conducting large 6–7 figure transactions on the platform.

Flippa had an incredible year last year, with Gross Merchandise Value (GMV) growing organically circa 100% YoY, adding 300,000 new users in the process.

We expect this momentum to snowball as the digital economy globally continues to blossom, and Flippa becomes synonymous with buying and selling online businesses. Flippa is entering a new scale-up phase as they double headcount, hiring globally across Melbourne, San Francisco, and Austin, and we are thrilled to be partnering with Blake Hutchison, CEO of Flippa, and the rest of his team for this epic journey. They are proving that it is very possible to build a global marketplace from Melbourne, Australia.

I encourage everyone to check out the listings available on Flippa. There are new listings being added every day, and you never know, you might find inspiration through an exciting eCommerce store, newsletter, or mobile app to take you on your next professional adventure.

Posted in — News


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