4 Types of Website Investors and Website Investment Strategies
When a website owner is planning to sell his website business, the first question that goes through his mind is “Who will buy my website?” It’s an important question and a very common question. Many website sellers attempt to define or predict what specific type of buyer should or will buy their website.
As a website broker who has been involved in tons of website transactions, I can honestly tell you that I have never been successful at predicting who will buy my client’s website. I’ve always been surprised by who ends up acquiring the website. It’s never who I expect.
When you sell a website business, it’s impossible to predict who will buy it. Every website buyer has a different investment strategy. But they can all be placed in certain categories. Let’s look at the 4 main types of website buyers:
1. Some buyers specialize in a specific niche in order to buy & improve websites.
Many buyers who own and operate websites in a niche will often focus on buying websites in that niche. In this way, they can transfer the knowledge they’ve developed in their other websites to new websites in order to improve the websites’ performance.
These buyers include professional investors who often purchase distressed websites and improve them drastically to build their financial wealth.
2. Some buyers don’t care about the niche and just focus on websites in a certain price range.
Some buyers have a specific amount of cash earmarked for investment. They don’t particularly care what type of websites they invest in as long as they fit within their budget.
These buyers are willing to invest and learn from the website seller how to run a website in any niche. More often than not, these are investors who are new to the website business. They’re often individuals who have made money in other traditional careers or businesses and want to invest in websites for passive income.
3. Some buyers are only interested in cash-flow and getting a 25%+ return on their investment. They simply maintain the websites they acquire.
In a way, the buyers in this category are similar to the buyers in category #2. The only difference is that the buyers in category #3 tend to have some experience in running website businesses.
They have confidence in their ability to increase or, at least, maintain the operational and financial performance of a website that they acquire.
4. Some buyers are only interested in buying proprietary technology and are not interested in cash-flow.
This last category of buyer is more rare. Very few professional website investors focus on acquiring proprietary technology in a website acquisition.
Most buyers are heavily interested in cash-flow. But there are a few buyers who are not focused on cash-flow. They specialize in acquiring proprietary technology or other assets used on the website and developed by the website seller.
In some cases, a buyer may acquire a website for an asset such as a premium domain name upon which the website is built. The cash-flow may not matter to the buyer who intends to use the domain name for a different website.
How do you sell your website if you can never predict the right type of buyer?
So you can’t predict who the buyer will be or what the buyer will do with your website. That depends on who the buyer is and what their preferred investment strategy is. And many buyers fit into multiple categories.
Your job is to present the website in a carefully-prepared Prospectus at the right price to all potential buyers. Let all buyers come in the door with their unique plans and strategies for your website.
Every buyer wants to pay a price that gives them a good ROI based on their investment strategy. If they can’t get a good ROI, they will not buy your website. Price well, and let all buyers come to you.
Let the buyers decide what they want to do with your website. You don’t have to predict who they will be or tell them what to do with the website. That’s each buyer’s decision.
Need professional help? Contact Us, we’ll do it all for you, and present your website to our large database of buyers.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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