Onfolio Holdings Chairman And CEO Releases Shareholder Letter

Author: Benzinga Newsdesk | February 18, 2025 09:19am

Dear Shareholders,

What a difference a year makes.

Looking back on 2024, I'd like to reflect on our journey and progress in light of our original thesis. We started with four key beliefs:

1. There are hundreds or thousands of profitable online businesses undervalued due to idiosyncratic risks or suboptimal operations.
2. Aggregating these businesses reduces individual risk, strengthening the portfolio.
3. Our operational expertise enables us to run and grow these businesses more effectively than their previous management.
4. Our public company status allows us to access capital at costs lower than the returns generated by our acquisitions.

In 2024, we made significant strides in all these areas.

1. Strategic Acquisitions Strengthened Our Portfolio

We acquired three new businesses, adding eight revenue streams and $6M in revenue:

• RevenueZen (RZ) (January 2024): A content marketing agency with $1.4M revenue and $227K net profit. RZ retained its entire team post-acquisition, enhancing operational expertise across our portfolio. This acquisition demonstrated our ability to structure deals with minimal upfront cash, utilizing promissory notes, preferred shares, and seller financing.
• DDSRank (July 2024): A niche SEO agency for dentists ($500K revenue, $200K net profit). Funded via one of our our SPV funds, preferred shares, and seller notes, requiring minimal Onfolio cash.
• Eastern Standard (ES) (October 2024):  A digital marketing agency well known in the health and education industries, with $4MM revenue and $630K net profit. This was structured similarly to DDSRank, with SPV fund participation enabling us to secure a majority stake while preserving capital.

Each acquisition reinforced our ability to execute capital-efficient deals while improving operational efficiency.

2. Evolving Our Operating Model

Effective post-acquisition management is key to our success. While we initially operated as a centralized entity and later decentralized entirely, in 2024, we adopted a hybrid model;"centralized strategy, decentralized execution." This allows portfolio company leaders to focus on their strengths while benefiting from Onfolio's shared expertise, strategic oversight, and best practices.

This approach enhances operational efficiency, accelerates growth, and enables acquired businesses to maintain and expand profitability. It also allows us to actively participate in strategic hiring, key decision-making, and resource allocation, maximizing value creation across our holdings.

3. Expanding Our Capital Strategy with SPVs

In March 2024, we launched SPVs (Special Purpose Vehicles), allowing accredited investors to co-invest in acquisitions. This proved instrumental in funding DDSRank and ES, enabling us to secure valuable businesses while preserving Onfolio's cash. While SPVs involve higher capital costs due to equity sharing, they provide an effective solution for funding accretive deals without reliance on traditional debt markets.

For SPV investors, this offers exposure to specific online businesses with a clear return profile, albeit with higher risk and less diversification than Onfolio itself. While not a long-term strategy, SPVs will remain part of our acquisition playbook in 2025, alongside preferred shares.

4. Quoting Our Preferred Shares on OTCQB

A major milestone was quoting our preferred shares on OTCQB, providing liquidity for early investors and expanding access for new ones. Each share pays a $3 annual dividend, appealing to income-focused investors. Since 2022, we've raised $1.5M in preferred share financing and issued $3M of preferred shares as part of acquisition financing.

This liquidity should drive demand, potentially allowing us to raise capital more efficiently in 2025 at a lower cost (12%) than SPVs. We anticipate growing this funding channel, unlocking further acquisition opportunities with minimal dilution.

On the Verge of Profitability

Throughout 2024, we have significantly reduced our losses and we now appear to be essentially at profitability. We've reached a position where we can continue operations without requiring additional fundraising or acquisitions to achieve profitability, yet we will continue to pursue both because they accelerate our growth and long-term value creation. With this foundation, we expect to move firmly into sustained profitability in the near term.

Looking Ahead to 2025

With our acquisition model validated, capital access expanded, and operational efficiencies improving, 2025 promises even greater momentum. Our roadmap is clear:

• Continue acquiring high-quality businesses, where synergies create exponential value.
• Expand capital raising efforts, leveraging preferred shares and SPVs.
• Further optimize operations, scaling our playbook for sustained growth.
  
   

If we execute well, we anticipate achieving significant profitability in the near term, reinforcing our ability to deliver compounded returns for our shareholders.

Onward to an even stronger 2025.

Posted In: ONFO