BuyAndSellItAll adopts ‘managed investing’ approach to private equity
BuyAndSellItAll Inc has adopted a new management approach to private equity because it believes that the traditional angel investing model is broken.
The firm has structured itself as an investment company with a hands-on management philosophy.
Operating as the parent, BuyAndSellItAll currently owns three home-grown operating companies, Automall Network, Transition Squad and TheyWroteOffMyCar.com, as part of its investment portfolio.
The company plans to focus its energies on growing the existing businesses while investing in two to three very early stage synergistic start-ups per year over the next few years.
With the mantra of "Start->Grow->Exit" as its philosophy, BuyAndSellItAll is setting out to reduce its risk through more direct involvement and management compared to the traditional angel investing approach, while building a stable of real businesses that focus on cash flow.
"I have been a serial entrepreneur, in fact a parallel entrepreneur, all of my working life and have been constructing this business model in my mind for some time now," says Viraf Baliwalla, founder of BuyAndSellItAll. "I've always felt that if you have a parent with senior executives in various aspects of business, like marketing, sales, finance, IT, etc., then that team can manage several operating entities that can run very lean and focus on their core business. In addition to these expert resources, back office services can also be shared amongst all operating entities at lower costs until they reach profitability, to make investment dollars work more for growth than overhead."
Angel investing is still evolving, having advanced from individual investments from high net worth individuals or VCs to organised angel groups that syndicate deals, to reduce risk and increase deal flow. Overall statistics show that less than one in ten investee companies will be successful and will pay for the losses of the other companies. However it may take five to seven years of anticipation for that one company to get there. This means that an individual investor needs to have approximately 10 to 15 companies in their portfolio consistently and then cross their fingers that one of them is the next Facebook.
The firm says a managed investing approach helps investee companies monetise faster and even pay distributions to the parent company and investors, while moving towards an exit.
"I got involved with angel investing about a year ago" says Baliwalla. "The challenges observed for both investors and investees confirmed that a Managed Investing approach would be beneficial for both sides, however synergy is very important.
"Once you build a channel to your end customer, then you can fill it with many other things thus providing multiple lifetime revenue streams per client,” says Baliwalla. "There is a greater trust factor and marketing to the same clients becomes easier and less expensive because a relationship has already begun. We have Transition Squad clients who have taken auto buying courses and bought cars through Automall Network, and Automall Network customers who are now regulars at Transition Squad's estate sales and consignment store."
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