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Welcome Alts.co Newsletter Readers!

We are now offering a one time opportunity to invest directly in EF Capital at a reduced minimum investment amount of $50k for all Alts.co readers who attend our EFC Direct Raise Webinar.

Empire Flippers Capital

Turn Active Online Businesses Into Passive Income

How EF Capital Works

Select Operators

Choose from vetted operators based on their track record and strategy

Click "Invest"

Sign legal documents & transfer your funds

Receive Distributions

Own a fractional piece of each business and receive quarterly distributions


Everyone's Interests Are Aligned

Benefits for Investors
  • Completely passive investments managed by handpicked professional operators with successful track records
  • Diversified portfolio of fractional ownership across a variety of business models to reduce the risk of any single point of failure
  • 20% projected average annual returns (see Summary of Terms below)
Benefits for Operators
  • Ability to focus on core competency of running online businesses
  • EF Capital handles the legal set up, securities compliance, investor relations, and ongoing reporting
  • Co-invest 5% into every deal and receive 4-5X leverage
Benefits for EF Capital
  • Enhanced liquidity and investor pool for the online business world
  • All acquisitions take place on our marketplace, ensuring world class vetting and oversight of the entire investment process
  • 10% share in profits generated for investors
Aligned Incentives
  • Payouts to Operators and EF Capital are based on profits only creating a win-win-win scenario
  • No operator salaries, hidden fees or annual management costs in the deals
  • Operator performance will be public and determine access to future deals


Who is this investment for?

Who this is for:

Accredited investors who want exposure to online businesses but may not have the time or skill set

Entrepreneurs and Founders who may have the skill but want passive returns and diversification

Who this isn't for:

Non-accredited investors or those who don’t have the capacity to take on the risk or diversify across multiple deals.

Active investors looking to run their own online business

 

EF Capital Summary of Terms

Investor Profile Accredited Investors
Minimum Investment $30,000 USD
Capital Stack 95% investor capital
5% operator capital
Profit Split &
Carried Interest

66.7% to Investors
33.3% Carried Interest

20% to Operators
10% to EF Capital
3.3% to Advisors

Operating Profit
Distribution Schedule
Paid Quarterly. Split at the percentages above
First distribution 9-12 months after investment
Sale of Business
Distribution Schedule
Investors recoup their initial investment first
Increase in business value is split at the percentages above
Hold Period 2-4 years
Return Expectations 20% projected average annual returns*
Reporting Quarterly reports including financials and commentary.
Financials will be put together by a 3rd party accounting firm and reviewed by EFC

* These are estimated returns which may be significantly higher or lower. There is no cap or guarantee on returns, and investments may result in partial or total loss.  Please refer to legal fund documents for full detail of terms.

Why Invest with Empire Flippers Capital?

Empire Flippers has done over $300 million worth of deals and is the #1 largest curated marketplace in the world for online businesses. Over the last decade, we’ve built a network of operators with successful track records.

 

Businesses Brokered
1,800+

Sales Volume
$350M+

Active Buyers & Sellers
225K+

Return Expectations

Where do returns come from?

  • Purchase Multiple – An online business is typically sold for a monthly multiple. For example, if a business makes $25,000 per month, and it is acquired for $1,000,000, that makes the purchase multiple 40x. If you bought this business to manage and earnings stay the same, you would receive a 30% annual ROI.
  • Carried Interest – These are the fees paid by the investor out of the profits. With 33% carried interest, the investor keeps 2/3 of the profits in order to turn this into a passive investment and be able to build a diversified portfolio with fractional ownership. A business acquired at a 40x multiple that generates a 30% annual ROI would net investors 20%.
  • Growth/Decline – This is a risky investment and we’re projecting that one out of five deals could fail. In a diversified basket of deals, the growing deals can offset the losers. We strongly recommend only participating in EF Capital if you plan to do multiple deals.
  • Exit Multiple – Valuation multiples have continued to increase every year. We have used conservative estimates in all of our projections but if this trend continues or accelerates, investor returns could be positively impacted.

Frequently Asked Questions

What are the risks I should be aware of?

Past performance is no guarantee of future results and any expected returns on investment disclosed through the investor platform are hypothetical and may not reflect actual future performance. All investments made through the investor platform may result in partial or total loss. All fund performance information disclosed through the Investor Platform is presented prior to the removal of all management fees and expenses unless otherwise disclosed. Some of the statements made on the Investor Platform constitute forward-looking statements and should not be relied upon as predictors of future events. These statements may fail to account for both known and unknown risks, market or other uncertainty, changes in the economy as a whole, or changes outside of the control of the Operator.

Nothing contained within the Investor Platform or the Services should be considered investment advice and you should obtain investment and tax advice from independent investment professionals prior to investing in any offering provided through the Investor Platform or the Services. All information provided through the Investor Platform and the Services, including information in private placement memorandums, have been prepared without knowledge of or concern for each Investor’s individual financial situation or risk tolerance.

Nothing contained within the Investor Platform or the Services should be considered to constitute tax, legal, or investment advice.

What are the accreditation requirements?

The official SEC criteria for accredited investors is outlined below.

Income can be from any source including your own business.  The only exception is income from your primary residence.

  • I. Subscriber has a net worth, either individually or upon a joint basis with Subscriber ’s spouse, of at least $1,000,000, or has had an individual income in excess of $200,000 for each of the two most recent years, or a joint income with Subscriber ’s spouse , or spousal equivalent, in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year.
  • II. Subscriber is an irrevocable trust with total assets in excess of $5,000,000 whose purchase is directed by a person with such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment.
  • III. Subscriber is a bank, insurance company , investment company registered under the Company Act, a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (the “Exchange Act “), a state -registered or SEC -registered investment adviser, an exempt reporting adviser pursuant to Section203(l) or 203(m) of the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”), a rural business investment company (RBIC ) as defined in Section 384 A of the Consolidated Farm and Rural Development Act, a business development company , a Small Business Investment Company licensed by the United States Small Business Administration , a plan with total assets in excess of $5,000 ,000 established and maintained by a state for the benefit of its employees , or a private business development company as defined in Section 202(a)(22) of the Advisers Act.
  • IV. Subscriber is an employee benefit plan and either all investment decisions are made by a bank, savings and loan association, insurance company, or registered investment advisor, or Subscriber has total assets in excess of $5,000,000 or, if such plan is a self-directed plan, investment decisions are made solely by persons who are accredited investors.
  • V. Subscriber is a corporation, partnership, limited liability company or business trust, not formed for the purpose of acquiring the Interests, or an organization described in Section 501(c)(3) of the Code, in each case with total assets in excess of $5,000,000.
  • VI. Subscriber is an entity in which all of the equity owners, or a grantor or revocable trust in which all of the grantors and trustees, qualify under clause (i), (ii), (iii), (iv) (v) above or this clause (vi) . If Subscriber belongs to this investor category only, list on a separate sheet to be attached hereto the equity owners (or grantors and trustees) of Subscriber and the investor category which each such equity owner (or grantor and trustee) satisfies.
  • VII. If a Subscriber holds, in good standing, one of the following certifications or designations administered by the Financial Industry Regulatory Authority, Inc. (“FINRA”): the Licensed General Securities Representative (Series 7), Licensed Investment Adviser Representative (Series 65), or Licensed Private Securities Offerings Representative (Series 82).
  • VIII. If a Subscriber is a “knowledgeable employee” within the meaning prescribed under Rule 3c-5(a)(4) of the Investment Company Act of 1940, as amended (the “ Investment Company Act”) of a private fund exempt from registration pursuant to Rule 3(c)(1) or Rule 3(c)(7) of the Investment Company Act.
  • IX. Subscriber is an Indian tribe, governmental body, or an entity organized under the law of a foreign county, that owns investments, as defined in Rule 2a51-1(b) of the Investment Company Act, in excess of $5,000,000.00, and was not formed for the specific purpose of investing in the securities offered.
  • X. Subscriber is a family office, as defined in Rule 202(a)(11)(G)-1 of the Advisers Act (the “Family Office Rule”, or a “family client” of such family office as such term is defined in the Family Office Rule: (a) with assets under management in excess of $5,000,000.00, (b) not formed for the purpose of acquiring the Interests, and (c) the acquisition of the Interests is directed by a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of acquiring the Interests.

Will non-American citizens be able to invest?

Absolutely.  As long as investors meet the accreditation requirements as laid out by the SEC they will be able to invest.

Will there be any future capital calls?

There will be no additional capital calls for investors, meaning you’ll never be required to contribute additional funds into any deal.

What reporting will be available, timing of reports and verification?

Investors will receive a quarterly report on their deals with financials and written commentary.  Financials will be put together by a 3rd party accounting firm, who will have direct access to the monetizations and bank accounts. They will pull the numbers and put the reports together.  EF Capital will audit the reports for any questions or anything unusual and ask the operators to explain in detail. Operators will put together commentary on the performance of each deal, what happened in the last quarter and their plan for the coming quarter.

How do acquisitions work?

Once you’ve made your initial investment, the operator will continue to raise funds from other investors to acquire the full amount needed. We will hold all the investment funds in a segregated account and ensure they are only deployed to purchase businesses that match the operator’s predetermined criteria.

Note: If the money is not deployed within 90 days from the acquisition of full funding, it will be refunded to the investors. If the operator acquires less than the amount raised including money set aside for growth, the difference will be refunded to investors proportionally.

The operator will acquire a business from Empire Flippers that matches their acquisition criteria and growth plan. Once the funds are deployed and the business has been acquired, the operator may reinvest some of the monthly profits into growth. Some operators will set aside some of the money that has been raised to be used for growth, and if they do, the amount will vary from operator to operator and will be outlined on the individual deal page.

What is the legal and ownership structure?

Each deal is a separate legal entity with separate investors and separate operators. It is set up this way to limit liability for the investors and limit risk to any given deal.

Operators and investors own the LLC equivalent to the cash they put in (95% Investors, 5% Operator). Operators, EF and Advisors receive an additional carried interest based on the profits but no additional ownership.

How can this be treated for tax purposes?

Each LLC is a passthrough entity. You will get a K-1 that shows the income of the LLC.  Any income and any eligible depreciation will pass through.  Please consult with your tax accountant for planning advice.

Is there tax withholding for non-Americans?

Yes, the setup is standard. If you’re a non-American and have invested internationally it will be exactly the same. Tax withholding on non-American companies is 21%. Tax withholding on foreign individuals is 37%. Please note that foreign trusts are taxed at the individual rate of 37% as well.

The US has tax treaties with many other countries so you should not be double taxed even if they withhold a higher amount you may be able to file a tax return and claim some of it back. Please consult with your tax accountant for planning advice.

Can investors be involved in the operations of the business?

Apart from investing your capital and choosing which operator you want to work with, this investment will be completely passive.  You will not have access to the operator to ask questions or give your input on how to run the business. You will simply receive a quarterly report and a quarterly payment for each deal you invest in.

How do I become an operator with EF Capital?

Please fill out our operator interest form (empireflippers.com/operator) including your experience, strategy, current and past portfolio performance. We will inform you of our vetting process and be in touch to discuss next steps. Please wait to hear back from us after you submit your form.

It is critical for EF to get the best operators involved in the program. We are diligent in vetting them and making sure they’re qualified.

View Full FAQ

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