The world of online business investing can be daunting, especially for beginners. That’s where brokerages and marketplaces come in, allowing beginners and even expert investors support in the exit and acquisition process.
In this article, we will delve into the inner workings of Investors Club and provide a comprehensive review of how they operate. From the benefits they offer to the potential risks involved, understanding the dynamics of this broker will help you make an informed decision about joining their premium membership platform. So, if you’re curious about how this online business brokerage conducts deals and what to expect, keep reading.
What is Investors Club?
Investors Club is a curated marketplace and brokerage dedicated to facilitating deals for online businesses. With a small but focused selection on mainly e-commerce and content-based online businesses, this brokerage remains a favorite with monetization-specific investors.
Founded in 2020 by Andrej Ilisin, Investors Club was started out of frustration for the current state of the online business acquisition process. Andrej felt that the existing system was costly, inefficient, and unfair to sellers. With his own brokerage, he decided to create a system where sellers would get their time back and be treated fairly.
The “Club” in Investors Club’s name is literal. This brokerage operates on a membership basis where paid membership unlocks premium benefits such as access to handpicked businesses, private deal flow, due diligence reports, and white-glove customer support.
What is Investors Club Most Known For?
This broker is primarily recognized for its focus on quality listings, vetted businesses, and maintaining a community of serious investors.
For buyers, Investors Club offers a transparent and secure buying process with free site migration, legal documentation, and escrow services. They also provide SEO analysis, SWOT analysis, and growth opportunities for each listing.
The in-depth research Investors Club offers buyers upfront is a strong differentiator to other brokers in the industry. Buyers have access to an established view of where the business is today and also suggestions for the business’s growth potential. The time that this saves buyers cannot be understated, not to mention it helps sellers in selling their business faster.
Sellers can take advantage of Investors Club’s low fees, capped at 7%, making this commission one of the lowest offered in the brokerage industry. Sellers receive white glove support throughout the selling process, from deal support to free escrow and asset migration services.
What Data Exists About Their Track Record?
Years in the Industry: 3+ years.
Track Record Data: Investors Club has sold over 500 businesses since they were founded in 2020.
List Multiple Range: 25 – 60x
Average Listing Multiple: 30x
What Types of Businesses Does Investors Club Offer?
Investors Club primarily deals with:
- Content Websites – This umbrella term includes affiliate, display ad, lead generation, and membership sites
- E-commerce stores
Investors Club plans to expand their offering to include Software as a Service (SaaS) as well as other business models.
In order to sell a content or e-commerce business with Investors Club, the business must meet three simple criteria:
- The site must be predominately in English
- The business must average a minimum revenue of $500 a month
- The site must have at least six month of traffic and revenue history
- The content and listings for products must be predominantly in English
- The business has a minimum average net profit of $1000
- The business has at least 12 months of verifiable sales history
Investors Club Commission Fees & Pricing
Fees and Pricing for Buyers: Typically there are no upfront fees for buyers to buy, however, buyers would pay a membership fee if they choose to go with a premium membership with Investors Club.
Fees and Pricing for Sellers: There is no listing fee for sellers. The commission is generally capped at 7% of the business list price.
How Investors Club’s Membership Works
Unlike other marketplaces, Investors Club charges a fee for joining their “club” or marketplace. They have a free membership and a premium membership plan.
Under the free plan, users are either qualified as a Guest or Verified Users. Both Guests and Verified Users can only access listings after they’ve been listed for five days.
Premium membership isn’t mandatory for buying a business but it is suggested to make the buying process optimized and simpler. Notably, premium members get a five-day headstart period to review new listings, meaning they have the first offer on competitive listings. Furthermore, the comprehensive due diligence reports Investors Club is known for become fully accessible through Premium Membership.
Below you’ll find a comparison of benefits between free and paid memberships:
While some buyers may hesitate to pay a membership fee, it does seem as though the premium membership pulls its weight for top benefits for buyers.
Let’s explore some of those benefits next during the buying process.
Buying a Business through Investors Club
The buying process is very straightforward:
- Create an account – When creating a free account with Investors Club, a buyer may opt for the paid membership to get full access to due diligence reports and early access to listings.
Browse listings and view detailed business metrics.
- Engage in due diligence – With the help of Investor Club’s due diligence reports (more on those in the next section) you are able to have a head start on the due diligence process.
- Make an offer – Once you find a business that meets your buying criteria you submit and offer to the seller.
- Negotiate the final deal terms – During negotiations, you and the seller will determine the final offer for the deal as well as any details surrounding seller support post-deal or a non-compete agreement.
- Migration – Investors Club handles the entire migration process including drafting the legal agreements, assisting with site transfer, switching affiliate links, handling account migrations, offering a free escrow service, and monitoring site performance during the inspection period.
Due Diligence Process with Investors Club
Investors Club offers detailed due diligence reports for its members to ensure they make informed investment decisions.
These reports cover various aspects of a website, including business summary, financial overview, traffic analysis, business analysis, site information, spam signals, content analysis, SEO analysis report, and traffic analysis report.
Here are a few highlight sections from Investor Club’s due diligence reports:
Business Summary: provides key details about a listing, such as the site’s age, asking price, average monthly net revenue, monetization method, and business type. Premium members have access to the site’s URL, a detailed interview with the seller, and additional information about the site’s history and assets included in the asking price.
Financial Overview: presents six to twelve months of financial data, including gross revenue, expenses, and profit. This information is displayed in both graph and table formats, allowing users to easily analyze revenue trends and seasonal fluctuations.
Traffic Overview: displays data directly from the seller’s Google Analytics, providing information about total pageviews, unique pageviews, total users, new users, top pages, top channels, organic landing pages, top countries, and devices. This data is updated weekly and verified to ensure accuracy.
Business Analysis: covers niche analysis, competitive analysis, risk analysis, growth analysis, and workload analysis. This section provides valuable insights into the site’s potential and earning capacity, helping investors make informed decisions.
Site Information: examines the domain strength and how the site is perceived by search engines and users, ensuring the site is well-optimized and user-friendly. As a part of the site information section, premium members also have access to spam signals, which highlight any potential issues with the site, such as Google penalties or questionable link-building techniques. This section also includes the site’s Wayback history and tech stack information.
Content Analysis Report: evaluates the site’s content, including the number of pages, word count, types of articles published, author authority, outbound links, use of filler words, plagiarism, quality of media, and more.
SEO Analysis Report: (exclusive to Premium members) provides an overview of the site’s onsite and offsite SEO, including domain metrics, spam signals, site scan results, page speed, mobile-friendliness scores, CTA analysis, and backlink profile analysis.
Traffic Analysis Report: provides detailed information about the site’s traffic data, including 12-month averages, traffic sources, device type, user demographics, most trafficked pages, top keywords, and current position in search rankings.
Finally, Premium members have the option to ask the seller questions directly or read through questions asked by other members to learn more about the site. This allows for open communication and negotiation between buyers and sellers.
Overall, Investors Club’s detailed due diligence reports offer comprehensive insights into the financial, traffic, and business aspects of a website, helping investors make well-informed decisions and minimizing risks.
Selling Your Business with Investors Club
The process of selling a business with Investors Club can be summarized as follows:
1. Quick Submission: Fill out a brief form with basic information about your business.
2. Initial Review: Investors Club reviews your submission to ensure it is a good fit for their marketplace.
3. Detailed Submission: Provide more detailed information about your business that will help Investors Club conduct their vetting process.
4. Valuation and Verification: Investors Club reviews all the details and verifies the information, then suggests a selling price.
5. Exclusivity Agreement: Sign an agreement to list your business exclusively on Investors Club’s marketplace for a specific period of time.
6. Listing Goes Live: Investors Club publishes your listing and shares it with their network of buyers.
7. Listing Sold: Negotiate with potential buyers and accept an offer that meets your expectations.
8. Ownership Transfer: Investors Club handles the legal paperwork, asset transfer, and post-sale inspection.
9. Happy Dance: Celebrate the success of the sale, as the entire process usually takes two weeks to three months.
FAQs About Investors Club
Is Investors Club Legit? Absolutely. They’ve facilitated hundreds of successful sales and maintain a strong reputation in the industry.
Is an NDA Necessary to Review Listings? No, an NDA is not required to view listings on the marketplace.
Does Investors Club Offer Post-Sale Support? Yes, they typically offer support to ensure a smooth transition. Typically built into the Asset Purchase Agreement (APA), sellers tend to offer 30 days of support after the business is migrated to the buyer. The level of support and amount of communication is outlined in this agreement prior to the deal closing.
Who Handles the Migration of the Business? Investors Club offers free migration for every deal. Once the buyer’s funds land in escrow, Investors Club begins the transfer of the domain, hosting, site files, affiliate IDs, etc. After the transfer of all assets, there is a 14-day inspection period to monitor that traffic and earnings remain as expected. If the business performs consistently, the funds are then released to the seller after the inspection period.
What Payment Methods Are Accepted For Buying a Business? Mainly bank transfers and escrow services.
Pros and Cons of Using Investors Club
Pros of Using Investors Club to Buy or Sell a Website/Online Business:
Short Exclusivity Period – Investors Club is adamant that exclusivity periods with brokers should be short, which is why they structured their exclusivity for 45 days maximum. While other brokers make sellers sign six-month contracts, a seller only has less than two months to commit to Investors Club to sell their business.
Extensive Due Diligence and Website Audits – While many brokers provide vetting, few actually provide due diligence. This is a key benefit of using Investors Club. This brokerage actually fact and quality checks the business for sale, meaning some of the hardest work a buyer has to do has already been done for them. These comprehensive reports give buyers a great head start to understand the business at hand and if it fits their goals.
Low Commission Fee – Investors Club caps commissions at 7%, making them stand out in the crowd as one the most competitively priced brokers in the industry.
Cons of Using Investors Club to Buy or Sell a Website/Online Business:
Paid membership fee necessary for optimal user experience – If a buyer wants to fully utilize the Investor Club marketplace, they have to sign up for an annual membership. This model is becoming more normalized by some brokerages and while it does have its benefits, the costs associated with multiple memberships add up. While the free membership does give access to listings, only seeing listings five days after they go live doesn’t allow a buyer to compete on the best deals. Therefore, the premium membership is key to success on the platform, but it won’t come for free to eager buyers.
Small number of listings – At any given time the amount of listings live on Investor Club’s marketplace is relatively small compared to other brokerages. This makes it harder for buyers to find diversified deal options or they may have to wait longer to find a deal that they like should they be looking primarily to buy with Investors Club.
Short track record as a brokerage – Investors Club was launched in 2020 and would be considered one of the newer brokers in the industry. So far they have a solid track record, but that track record is short. Buyers and sellers may consider other brokerages over Investors Club simply because they are new to M&A.
The Final Review: Is Investors Club a Good Option for You?
Investors Club stands out for its rigorous vetting process and dedication to quality. If you value a seamless experience, expert support, and a platform with serious investors, it could be the ideal place to buy or sell your online business.
Buyers in particular will love the comprehensive due diligence reports on businesses which allow them to get a much more complete view of the business upfront versus having to spend time compiling that due diligence themselves.
Considering their short exclusivity period of 45 days and a low commission rate compared to the rest of the industry, they stand out as a competitive option amongst brokers in the industry.
Looking for more insight on who might be the best broker for you? Acquiring Digital is a leading advisor for buyers and sellers looking to make their first or hundredth exit or acquisition. Get in touch for a free online business M&A advisory call to kickstart your deal process.