I’ve been getting a lot of the same question lately, in different forms. On StockTwits, in emails, on calls: “Are you going to start acquiring sexier businesses?”
Here’s how I think about it. It depends on what you consider to be sexy.
We are not going to pay 8-10x for a business because it has AI in the name. We are not going to chase whatever narrative is hot this quarter and overpay for the privilege. Most of the companies pitching themselves as “AI-native” right now are burning cash, have no path to profitability, and will be gone in two years. Meanwhile, a well-run, profitable online business doing $1.5M in annual earnings will still be doing $1.5M two years from now, probably more.
Discipline in what you pay and what you buy is the thing that actually compounds. That hasn’t changed and it won’t.
What has changed is what we can go after.
The capital constraint is gone
When we started, we were constrained by our balance sheet. We could afford small deals, a few hundred thousand dollars here, maybe a million there. That meant small agencies, content sites, niche businesses. Good businesses, but limited by what we could fund.
That’s no longer where we are. With our equity line of credit and our existing capital relationships, the scale of what we can acquire has stepped up significantly. We’re not limited to “whatever we can afford.” We can now pursue larger, stronger businesses in more interesting verticals, and we can move more quickly when the right opportunity comes up.
The thesis is the same: buy at attractive multiples, improve operations, compound the cash flow. But the size and quality of what’s in our pipeline right now looks very different from what we were doing 12 months ago.
The moat nobody talks about
Here’s the thing that I think gets underappreciated: the advantage we have is the capital infrastructure itself.
There are tens of thousands of profitable online businesses doing $500K to $5M in annual earnings. They’re too small for private equity. They’re too profitable for venture capital. Their founders want to exit but their options are limited to marketplace brokers and individual buyers who are often buying their first business.
We offer something different: a permanent home inside a public company, operational support, and the capital to help them grow. That deal flow comes to us because very few public companies are set up to do what we do at this size.
Think about what a seller’s options actually look like. They can sell to a first-time buyer on a marketplace, take all the risk on seller financing, and hope the buyer doesn’t run the business into the ground. They can sell to a private equity fund, but most PE firms won’t look at anything under $5M in EBITDA. Or they can sell to us: a public company with a track record of over a dozen acquisitions, operational infrastructure to support their team, and the ability to close with a mix of cash and equity that gives them upside in the portfolio.
That’s a genuinely differentiated offering at this end of the market. It’s why we see the deal flow we see, and it’s why the pipeline is the most active it’s been since we went public.
What we’ve built to capitalize on it
Over the past year and a half we’ve proven that the operating model works. Eastern Standard generated a 33% earnings yield in Year 1. RevenueZen’s net margins recently doubled after we consolidated operations and deployed AI across the business. We’re rolling that same playbook out across Contentellect and DDS Rank.
Every acquisition we make now benefits from infrastructure that didn’t exist when we started: centralized agency operations under Eastern Standard, AI-driven workflows that reduce costs without reducing quality, and a team that’s done this enough times to have a repeatable process.
That means the next deal we close should perform better than the last one, because the operational platform it plugs into is stronger. That’s the compounding effect that doesn’t show up in a single quarter’s financials but changes the trajectory of the portfolio over time.
What’s ahead
The pipeline right now includes businesses doing $1M in EBITDA, businesses doing $2M, and businesses doing north of $10M. Our sweet spot is still in the $1-5M range, but the point is we’re no longer constrained to one end of the spectrum.
The quality of the pipeline has also improved significantly.
The mix includes opportunities in financial media, small-cap investor relations, ecommerce, and rounding out our digital marketing agency portfolio. In aggregate, the pipeline represents $15-20M in potential EBITDA, and it’s growing. We have the capital infrastructure to be able to pursue all of it, and we intend to move decisively.
This isn’t a five-year plan. The operational platform is built, the capital relationships are in place, and the deal flow is there. The goal is to add meaningful EBITDA to the portfolio in the near term, not incrementally over many years.
AI is an exciting addition and is a big part of how we make all of it work once it’s inside: improving margins, delivering services more efficiently, and building tools that solve real problems.
There’ll be more to share as these deals progress.
— Dom
Onfolio Holdings (Nasdaq: ONFO)
Disclaimer: This is a CEO update on Onfolio’s strategic direction. It is not financial advice and should not be taken as a solicitation to buy or sell any security. Forward-looking statements involve risks and uncertainties. For complete financial information, refer to our SEC filings at sec.gov.