Investing with EF Capital?

[Flex]

Has anyone here been an investor in EF Capital? Are you satisfied with the experience thus far?

 

[infoslob]

Has anyone here been an investor in EF Capital? Are you satisfied with the experience thus far?

What is EF Capital - or rather, which one are you referring to?

Getting mixed results looking around for it on Google & LinkedIn ...

 

[Ryuzaki]

What is EF Capital - or rather, which one are you referring to?

Getting mixed results looking around for it on Google & LinkedIn ...

I'd wager we're talking about Empire Flippers Capital. I've not used them. Basically you're chucking money at website builders with good track records for a return of the profits. You can invest across a bunch of sites or teams and get quarterly distributions. They're even offering leverage.

I'd be very careful and wary of stuff like this. Income Store just recently got popped as a ponzi scheme and the guy in charge is in prison now I believe.

I'm not at all saying I believe Empire Flippers would do this or that they're anything like that. I have positive opinions of their core business. I just think this type of thing can start swirling around the drain really fast. I'm sure they aren't promising returns, which would be the key difference. The investors need to understand they're carrying the risk and nothing is promised.

Here's the details that matter:

The blue link in the table has the important concepts behind it. "We think 1 in 5 deals will fail. Returns are calculated with the liquidation price included (I think they're implying anyways). Valuation multiples change."

 

[Flex]

Yes, that's correct. Empire Flippers Capital is what I am referencing

 

[secretagentdad]

Here's the sauce page.
https://empireflippers.com/efcfaq/
So the only thing I see is a bunch of extremely high fee's for network effect.
Am I missing something?

What are the terms of EF Capital? Investors put in 95% of the capital while operators put in 5% cash on every acquisition deal. There are no additional capital calls that require investors to put in more money than their original investment.​

Investors receive 2/3rds of the profits and 1/3rd goes towards operating the investment (33.3% carry). This distribution structure incentivizes operators to acquire and manage these deals. Investors are giving up 1/3 of the profits to turn online business investing into a passive investment.
The 33.3% carry consists of the following:
– 20% to operators
– 10% to EF Capital
– 3.3% to outside advisors (if there are no advisors, this will be retained by EF Capital bringing total carry for EF Capital up to 13.3%)
When the business is sold investors are paid back first and then any profits from the sale are split at the same percentages.
EF Capital receives 10% to help manage the relationship between the investor and the operator and to provide you with a hands-off experience that turns active investing into passive yield.
Please refer to legal fund documents for a full detail of terms that can on the EF Capital deal pages.

 

[Darth]

Income Store just recently got popped as a ponzi scheme and the guy in charge is in prison now I believe.

Any more info on that?

 

[infoslob]

I'd wager we're talking about Empire Flippers Capital. I've not used them. Basically you're chucking money at website builders with good track records for a return of the profits. You can invest across a bunch of sites or teams and get quarterly distributions. They're even offering leverage.

I'd be very careful and wary of stuff like this. Income Store just recently got popped as a ponzi scheme and the guy in charge is in prison now I believe.

I'm not at all saying I believe Empire Flippers would do this or that they're anything like that. I have positive opinions of their core business. I just think this type of thing can start swirling around the drain really fast. I'm sure they aren't promising returns, which would be the key difference. The investors need to understand they're carrying the risk and nothing is promised.

Here's the details that matter:

The blue link in the table has the important concepts behind it. "We think 1 in 5 deals will fail. Returns are calculated with the liquidation price included (I think they're implying anyways). Valuation multiples change."

One thing that EmpireFlippers & Income Store (which could be a ponzi like Madoff's where it's pretty clear the goal at the outset wasn't a ponzi - it just eventually morphed into one) have in common which is interesting is projected 20% returns.

Additionally, there's no funds or private placements connected with EF, so it appears they are segregating accredited investors arbitrarily. Could this be lead gen?

In the US the two most common private placements are:

506c ... you can advertise these deals anywhere, show them to anyone - but only accredited investors can participate and, importantly, the issuer itself needs to verify accredited status with the SEC (a hassle and an expense)

506b ... ban on general solicitation still applies - it may seem archaic but these deals cannot be shown or displayed to the public in any way AND deal portals that do feature 506b's have to take that step that EF takes to have accredited investors self-identify, as per the SEC's requirements (investors self-verify for 506b) But (to my knowledge after a quick search) EF doesn't have any funds or private placements. So to get a gander at those websites paying 20% accredited investors are self-identifying themselves into a neat and tidy list for EF. Well done, even if it isn't the main objective it's a terrific byproduct.

Whatever they're doing it seems worth it because that is not a rinky dink operation.

 

[miketpowell]

The risk/reward ratio is just not there IMHO.

There is a realistic chance that you lose your entire investment. For a potential estimated 20% upside? S&P 500 Index average return has been 12% or so and there is no risk of going to zero.

For this kind of upside, you'd need to have the people you are loaning to be fully liable for the debt. Equity loans where there is no personal guarantee need much higher than 20% yearly return upside potential.

 

[Philip J. Fry]

Has anyone here been an investor in EF Capital? Are you satisfied with the experience thus far?

It's for accredited investors only. You need to have 1 million USD in the bank or earn more than 200k/year if single. If this is not you, you don't have to worry.

 

[Flex]

It's for accredited investors only. You need to have 1 million USD in the bank or earn more than 200k/year if single. If this is not you, you don't have to worry.

Yes I'm aware of the accredited investor requirement (that's to be expected for this type of investment)