A $5 Million Dollar Fund for Acquiring WordPress Businesses

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Over the weekend at WordCamp DFW, I got to catch up with Mike Demo of WebVentures, previously of Bold Grid. He shared with me that Web Ventures had a $5 million dollar fund for acquiring / investing in WordPress businesses.

It got me excited for a couple of reasons:

  • It’s another example of how hot the WP ecosystem is for investment
  • It’s shows the ecosystem maturing, with more options
  • It gives WordPress entrepreneurs another option

Mike and I hopped on a Zoom call to talk about all Web Ventures is doing AND offer some lessons and takeaways for entrepreneurs considering a potential acquisition.

One of the most frequent questions I get asked is ….
how do I prepare my business to be acquired?

WANNA KNOW MY TAKEAWAYS?
Signup for Preparing TO SELL YOUR BUSINESS BABY HERE

OK, here is the video, podcast version and transcript below:

Lightly Edited Full Transcript

Cory Miller 0:00
Everybody this is Cory Miller, CoryMiller.com. So I was talking to my friend Mike demo at work camp Dallas this weekend. And he was telling me about what he’s doing now. And now, Mike, I know you were with bow grid at some point. And it’s kind of a family of things that you’ve been involved in here. But you were telling me about web ventures. And it’s really compelling because I’ve been in WordPress for, I don’t know, 13 years now. Now, I’m a WordPress blogger and WordPress volunteer, by the way, or word camp volunteers. What web ventures is doing what you’re doing specifically is really compelling because it shows that the community I think, is maturing. And there’s it’s just exciting to see a fun that like in a setup like web ventures doing work in the space investing in businesses. And so I thought I’d bring you on and share a little bit about what you’re doing. So my demo web ventures, Mark, thanks for being on the interview today.

Mike Demo 0:56
Oh, my pleasure. It was a great catch up with you down in Texas. I’m back up here in Minnesota and the weather’s not as nice.

Cory Miller 1:04
For sure. So okay, Mike, would you tell me a little bit about you and and what and what you’re doing at web ventures?

Mike Demo 1:11
Yeah, sure. Yeah, like Cory said, my name is Mike demo, and I am the lead hand shaker, a very fancy title for web ventures. And basically, I’m the community guy, and I get the joy to be able to go around the work camps and other types of events, and meet people where they are and connect with this amazing community we have in WordPress and other similar ecosystems, and just to see if we can maybe provide value and help some of these WordPress based businesses.

Cory Miller 1:45
Yeah, I love your approach to By the way, Mike, we’re talking about how you have conversations and I did notice actually, when I emailed you to set up this interview that you had lead handshake and I thought, that’s really awesome. I wanted to kind of fulfill that like, that’s my my My gig is a guy. But I love your approach to so could you tell me what? Okay, so web ventures was was kind of the iteration spin out of founder, one of the founders at in motion hosting.

Mike Demo 2:18
Yeah, so in motion hosting was primarily founded by two gentlemen, Todd Robinson and Cindy elsina. So Neil has a passion to growing businesses. And that’s what he really enjoys doing, and motions grown a whole bunch. So what he wanted to do is he wanted to help small businesses, specifically, WordPress based businesses kind of grow to the next level. And so we started a separate entity called web ventures, where about $5 million we have in this first initial round that we publicized and we’re trying to help WordPress based businesses and any businesses that are kind of in the web space. So it doesn’t necessarily need to be a WordPress plugin. But if it works in that ecosystem, we’re interested in talking and helping those companies get from one level to the next. Because a lot of people can get to like a good spot. Like let’s say, you’re a plugin owner as an example. And you make a decent little side income, you might have, you know, 20,000 active installs or whatever it is, but you’re at that weird spot where you can’t leave your day job, because you know, you got expenses and insurance and stuff like that. But you don’t know you don’t want to get rid of this plugin because it’s being used by all these people. So, so Neil wanted to help people get past that growing that growing pain stage, because that’s where we find that a lot of these WordPress based businesses kind of fail when they get some initial success, but they don’t know how to like turn it into a real business. I use the term accidental business owner when People start stuff because of passion, but they don’t really think about it being a business. They’re just doing it because they enjoy it.

Cory Miller 4:06
A lot of that and WordPress specifically, a lot of my dear friends did sent them because they were interested in it passionate about it, like you said, and then one day wake up and go, holy crap, I own a business that has a lot of substance, you know, revenue, perhaps even team members. I think there’s a lot in the space to that, that you talked about the hump of, I’m doing this on the side, I’m making some money, but I haven’t hit gotten over the hump of being able to quit my day job, for whatever reason, maybe there’s family setups, that, you know, entrepreneurship has this level of uncertainty sometimes, oftentimes, and, and or financial. It hasn’t gotten to the level to sustain it in I love that. I mean, the headline here is $5 million. That snail is put in that amount of money to invest in WordPress based businesses is pretty dang incredible. We’ve seen a lot of movement in WordPress, particularly with automatic just went through another round of funding with a ton of money back by sales forces fund and then they’ve had a couple of rounds of course have raised a lot of money and a big valuation. The hosting companies particularly have made some very big acquisitions. I’m part of that story with I themes to liquid web WP Engine is really making some huge moves and GoDaddy of courses as made some great moves in the past two and then my friends at EG I think are a little bit kind of calm right now. Not doing too much that I’ve heard of at least. But I love the fact that your your fund what you guys do very unique and I thought of my friend said bulky he’s got an accelerator WP beginning and I was like man, this is great to have these kind of opportunities. Okay, so we talked about the kind of the types of businesses kind of set up to I know Like there’s other components within the family, like, for instance, is bowl grid a part of web ventures? How does that all work?

Mike Demo 6:08
Um, we’re going through a legal restructuring right now. So it’s going to be a little bit in shift. But right now bold grids. One of the brands in motion hosting is one of the brands, what hosting hubs and other the brands. We haven’t announced, but we’ll be making a work camp us on another new brand that will be coming into the family. And then we have letters of intent out for some other things, which hopefully we’ll be announcing closer to the new year. So yeah, it’s all kind of the same ecosystem. And that’s what we’re trying to do is we have around two to 3 million WordPress users across all of our brands and families of companies. And we want to make the best toolbox for those users. So everything we do is focused on our users and can be a good fit for them. So whenever we talk to a potential investment or possibly acquisition, we look to see what verticals these might go for what avatar is. And we try to tell the story from our users perspective, because that’s what we care most I mean, in motion was founded, even though that is a separate grant from some of these others, on, you know, thrilling customers, and we have that same passion now. And because we want to be able to offer our users Be it if they’re using an emotion customer, a bolt, good customer, or web hosting hub customer or any of these other brands will be announcing in the future coming months that we if we make a recommendation it fits in. So we can help a plugin kind of grow by introducing them to a lot of new users. But we need to make sure that story makes sense. And we’re not just, you know, spamming our user base because that’s something we really passionate about.

Cory Miller 7:57
Yeah, I know. We can’t talk about that one. That’s coming online for you all afterward camp or at work camp us, but I want to say it’s going to be it’s going to be big. It’s a it’s a big deal. And I’m excited for you guys to announce that. Okay, so if somebody is interested, they they’re talking to you and you’re the handshake guy. How does that process work? So

Mike Demo 8:18
yeah, so um, I like to say I’m the friendly face. So basically, we just have a high level conversation and say, Hey, if this is something generally, maybe you might be interested in looking at, you know, maybe now in the future, we do an initial call with Tim and he’s our senior manager. He’s a financial analyst background, and we kind of just do a half hour discussion kind of learning what the goals are for the company, like you know, what are your what’s your plan, where you want to go? What are your goals, some some entrepreneurs just want to go on and fund their next adventure and they want to sell their current company. Others just need help to grow. Everyone has a different story and I will I always like to tell people don’t look at some of the sales and acquisitions, they might be at chapter 20. In their story, you might only be at chapter two in your story. So try not, you know, compare yourself. And we always try to look at everyone individually. And then we’ll kind of talk about how it might fit in with our ecosystem. And if we feel there might be a fit, then we get on like a mutual nondisclosure agreement, and then we start exploring that in a little more detail. But at any time, I always tell all these business owners do what’s best for the business. I mean, if it’s not the right time, that’s fine. Be open and honest with us. I mean, on our side, we can only process so many deals at a time. So we’re going to be honest with you. And I find that really works with you know, we just want to be honest and have these businesses grow to the next level. Honestly, if it’s just us giving them some decent advice, but they don’t want to give up equity or anything. And maybe they might want to sell in a couple years. That’s fine. Maybe they thought they wanted to sell but then being changed, and now they want to stay with the business, that’s fine too. We are just happy to talk with anyone give our give our advice and help in any way we can. And that’s what I tell people is even if there’s not a deal, like, I’m not commissioned, I’m literally just community, I am happy just being out there and meeting you. And we’re happy to keep talking as long as it makes sense. And we’ll stay friends regardless. But if I can do anything to anyone for introductions or give advice, or at any way, I’m happy to do it, regardless if there is a business deal on the side end of that, because that’s secondary to what we’re trying to do. Our goal is just to try to be known as the helpful people that kind of help the community and if there’s business great if not, that’s cool to whatever is best for the business is what we care about.

Cory Miller 10:49
One of the biggest questions I get asked particularly after my the acquisition, and I think this is how, you know, takeaways and things like that, and I always kind of say You know, if I look back rewind the tape that I would have had more intentional conversations like these. Because one when I started the business I didn’t have an exit plan people asked me for years I was like, I don’t I hate I found my, the best job I’ve ever had working with the most incredible people ever in serving amazing, awesome customers. Why would I want to exit that however, things change, markets change, customers change, WordPress has changed and did change in my you know, 13 years or whatever. So, you know, I tell be ready. So I’m curious, have the conversations, particularly with people like web ventures and you because build for profit, one should be a profitable company. Second, it should be purposeful, like it should do things in your life and for people. But the third now I’ve added which is potential purchase, and a health in a sellable company, is a great company for the entrepreneur. If you’ve done that Things to kind of orient where people would want to buy your company. That means probably likely, you’ve got a great company, it’s going well for you. And that just gives you more options. So I’m curious if you have suggestions or tips for how someone can get ready to prepare themselves in their business for a conversation like one with web ventures.

Mike Demo 12:21
Yeah, so with us, we’re happy to talk to anyone at any stage. But let’s say just you’re starting new or you just started thinking like, you know, I’m not even wanting to have a conversation, but what are the some of the things we can do to kind of prep the books, some of the things we see quite a bit is not having any sort of formal business plan. They’re just kind of doing stuff and the seat of their pants. And I know business plans a scary word and you search on Google Business Line templates, because he’s 85 page diatribe books, but it can just be as simple as like a one sheet like if you google one sheet business plan. It just goes back to having goals and basic stuff on paper. I’m a big fan. That Any goals that you set for yourself should be smart goals going back to high school Specific, Measurable, Attainable, and, and have a time set on it, so that there’s no binary like, did it like did I succeed or not succeed? And they shouldn’t be? Oh, well, I don’t know. Or maybe it should be yes or no. And if it’s still, that’s fine, you learn stuff from it. But the goal should be very specific and have metrics behind it. So have some sort of a business plan. Know your costs, what we see quite a bit is people running personal expenses through the business that makes it a little challenging when you’re looking at valuation. Also, we find if you have a plugin business, but you also have a consulting business, it gets a little confusing if you run everything to the same business entity, because your business might look very profitable on one side, but then when we get into it, it might be due to the consulting, which is nothing wrong with consulting. But if maybe you’re wanting to sell just the plugin side, it changes the story a little bit. So those are just some basic things you can do to get ready now, but honestly just boils down to be deliberate in your decisions and spend a couple days every year and plan. My biggest recommendation is there’s a book called Gino by Gino Wakeman. That called the entrepreneurial operating system called traction. I recommend everyone follow that if traction is a little too boring for you. They have a second book called Get a grip, which is more entertaining. But honestly, I’m a huge fan of the EOS system. I’ve seen companies go from, you know, $4 million companies to $40 million companies in less than five years falling in his system. And that alone can be the one of the best things you can do to help make your business a little more than liberating new decisions.

Cory Miller 14:50
That’s great book that’s kind of the work doesn’t do traction but my partner GF does lead your team strategic planning really kind of focused progression. You know, having meetings and directions, a great book to get the conversation started, I wanted to come back to you, there’s two kind of things that I heard you saying that also in my experience, one is the business plan type thing, having something there on paper. For us, it was a deck having a deck and you know, you know, we build products and, and you know, there’s, there’s this thing called brochure is kind of an outdated term, baby. But still, if you think of a deck, it’s like, this is what I tell people as you have to detach emotionally from this baby, the startup that you built, detach in this process, because you can take things really personal when you’re talking about money and acquisition and everything but having a deck is sharing the best and brightest about what the what’s going on in the business and having a good handle on that. And the second thing you take, which is such brilliant advice is I know it wasn’t for us. We had one business, you know, we didn’t have like a lot of the people you’re talking about particularly in WordPress is consulting and then they started Building a product. And it’s all under one p&l, which is tough when you’re talking about acquisition because a lot of, you know, the things we’re talking about are more product specific. So separating those p&l, it’s a tough thing I’ve got actually going to go talk to you about that separating the p&l, whether it’s a separate LLC or whatever, but having separate things so that you can have an accurate read. But you mentioned something that’s a nuance that we all kind of do, which is running a lot of personal expenses to the business. I know it’s sometimes a tax tax help for us, however, it muddies the water when we’re talking about acquisition. Thankfully, we didn’t do do that with I things and had some entrepreneurs that were gave us advice years ago is to still do those, you know, be really selective what we do because it kills your EBIT da which is often a metric for how people value company’s earnings before taxes, interest in depreciation or something like that, April, and essentially your net profit. So a clean clean p&l and being able to Looking at that’s that’s superb advice, Mike, appreciate you sharing that.

Mike Demo 17:06
Yeah. And the The other thing I would say is, as far as valuations go, the biggest The best thing you can do to help your valuation is to help your profit margin, that’s probably one of the first things people will look at is, you know, what the margin is on your, on your profit. And, you know, we have our things that we look at, if it’s like, a really great profit margin average or not so great. And then that’s kind of where we start the discussion. Obviously, there’s other things that have that go into valuation like brand awareness and user base and things like that as well. But try to you know, clean up that profit margin as much as you can, because it’s just going to make a stronger business for you. So,

Cory Miller 17:47
yes, you’re absolutely right. It’s a win win. So I think a lot of people get kind of feel weird when they talk about selling their business, because there’s relationships, you know, particularly a team that affects right and there was the same with me. But a sellable business is a great business to also own as the entrepreneur. So that that’s really good advice that might we miss anything, anything you want to share? And then I’ll ask you also how they can connect with you and start some of those conversations.

Mike Demo 18:15
Sure. I think that the lot of people don’t step back and like, look at the success that they’ve done. I was talking to someone just at the word camp last weekend, and it was a woman and I was like, Hey, what do you do? Oh, I just kind of do websites on the side. Oh, so we have an agency? No, I wouldn’t call it an agency. We just have four people on my team. That’s an agency. And I hear a lot of the plugin owner like, Oh, well, you know, we’re not doing that. Well. We’re only converting at 9% which I’m like, 9%, free to premium that’s above industry average. Yeah, and I’m this that’s above average in our space, like, good job, and, you know, so if we can, if we can feel the top of the funnel, you know, theoretically, it’s just math at that point. So I find a lot Lot of times people don’t take the winds. And they always are looking for reasons that beat themselves down. So it’s not easy to get here. And you know, we’re just trying to help businesses kind of get to that next level. If it’s a fit to work with us fine. If it’s not, that’s cool. We just want to see this infrastructure get strong, because that just helps everyone. So yeah,

Cory Miller 19:22
that’s really good stuff. Okay, Mike, thank you for that. Where can people start the conversation with you and web ventures?

Mike Demo 19:29
Sure. So if you go to our website, www dot web ventures.io. There’s a little form you can fill out there in Alaska, get a free consultation call. If you want to email me directly. It’s just Mike demo. MIKEDMO at web ventures.io. If you want to be super casual, just tweet me at MP Mike.

Cory Miller 19:51
Excellent. I’ll put those in the show notes to thank you so much, Mike. I’m excited about what you’re doing. I’m looking forward to your announcement in the next week or two. Big one, and all you’re doing in the WordPress community.

Unknown Speaker 20:04
Awesome. Thanks so much, Cory.

Transcribed by https://otter.ai

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