Flippa Raises $11M for Online Business Marketplace

Flippa Secures $11 Million Series A Funding Round

Flippa, a leading online marketplace for the buying and selling of digital assets and online businesses, has announced the completion of its inaugural venture-backed funding round. The company secured $11 million in a Series A investment, reflecting the increasing demand from investors seeking connections with business owners.

Investor Details

The funding round was spearheaded by OneVentures, with participation from a diverse group of existing and new investors. These include Andrew Walsh, previously CEO of Hitwise, Flippa’s co-founders Mark Harbottle and Matt Mickiewicz, and 99designs.

Further investment came from Gabby and Hezi Leibovich, founders of Catch.com.au; Guy King and Bevan Clarke, the creators of RetailMeNot.com; and Tim O’Neill and Tim Fouhy, founders of Reactive Media.

Company Overview and Growth

Established in 2009, Flippa operates from locations in both Austin, Texas, and Australia. The platform has facilitated exits for a substantial number of online business owners, encompassing ventures operating on e-commerce platforms, blogs, SaaS applications, and mobile apps.

Recent data integration now includes support for Shopify, as detailed by Flippa CEO Blake Hutchison in a conversation with TechCrunch.

Positioning and Services

Hutchison positions Flippa as “the investment bank for the 99%” of small businesses. The platform provides a comprehensive solution, featuring a proprietary business valuation tool – processing over 4,000 valuations monthly – and a sophisticated matching algorithm to connect businesses with potential buyers.

Business owners have the flexibility to sell their companies directly through the platform, or to engage a business broker or advisor. Additional services include due diligence support and acquisition financing through Yardline Capital, a Thrasio-owned entity, alongside a new legal service, Flippa Legal.

Data-Driven Verification

“Our strategy centers on verification through data,” Hutchison explained. “Currently, users can seamlessly connect to platforms like Stripe, QuickBooks Online, WooCommerce, Google Analytics, and Admob, enabling them to showcase their online business performance with a single click.”

This allows buyers to efficiently evaluate both the financial and operational aspects of potential acquisitions.

E-commerce Landscape and Market Trends

The proportion of total retail sales occurring online increased to 19.6% in 2020, a rise from 15.8% in 2019. This growth was significantly influenced by the global pandemic and the subsequent shift to online shopping as physical stores were forced to close.

With Amazon hosting 6 million sellers and Shopify powering over 1 million businesses, a surge in e-commerce aggregators has emerged. These venture capital-backed entities are actively acquiring successful businesses, often discovering them through Flippa’s marketplace, according to Hutchison.

User Base and Transaction Volume

Flippa boasts over 3 million registered users, with 300,000 new registrations in the last year. The company’s overall transaction volume is experiencing year-over-year growth of 100%.

Despite being bootstrapped for more than a decade, the company’s expansion and potential prompted Hutchison to pursue venture capital funding.

The Emerging Asset Class

“There’s a growing recognition of this sector as a legitimate asset class,” he stated. “Currently, the market is undervalued, attracting significant investor interest as they acquire and consolidate businesses. We anticipate the development of specialized aggregators, such as ‘X company for apps’ or ‘X for blogs.’ ”

Future Plans and Investment Allocation

The new funding will be allocated to doubling the company’s workforce to over 100 employees, expanding its global office presence with outposts in Melbourne, San Francisco, and Austin.

Investments will also be directed towards marketing initiatives and the enhancement of its business valuation tool, which Hutchison compares to the “Zillow Zestimate,” but tailored for online businesses.

OneVentures’ Perspective

Nigel Dews, operating partner at OneVentures, has been closely monitoring Flippa’s progress since its inception. His firm, one of Australia’s oldest venture capital firms, manages a portfolio of 30 companies focused on healthcare and technology.

Dews believes Flippa has the potential to significantly impact small businesses. The combination of the team’s expertise and the platform’s ability to connect buyers and sellers positions the company for success in capitalizing on the marketplace effect.

“Flippa represents an exceptional opportunity for us,” he added. “It’s rare to encounter a world-leading business in a nascent category with strong underlying trends. We were also drawn to the company’s Australian base, while generating half of its revenue from the U.S.”