How2Exit and all its media are supported by its audience. When you use links on our site, just assume we are compensated in some manner
April 20, 2022

How2Exit Episode 28: Juan Ignacio Garcia Braschi - CEO of Boopos

How2Exit Episode 28: Juan Ignacio Garcia Braschi - CEO of Boopos

Boopos helps talented buyers acquire a business and brokers close their sale mandates by committing flexible financing for buying an e-commerce or SaaS businesses.
--------------------------------------------------
Contact Juan on
Linkedin:...


Boopos helps talented buyers acquire a business and brokers close their sale mandates by committing flexible financing for buying an e-commerce or SaaS businesses.
--------------------------------------------------
Contact Juan on
Linkedin: https://www.linkedin.com/in/jigarciab/
Website: https://www.boopos.com/

If you’d like additional ways to support this podcast, you can become a patron here: https://www.patreon.com/bePatron?u=66340956
--------------------------------------------------
--------------------------------------------------
Contact me on
Linkedin: https://www.linkedin.com/in/ronskelton/
Twitter: https://twitter.com/ronaldskelton
Facebook: https://www.facebook.com/How2Exit
--------------------------------------------------
--------------------------------------------------
Watch it on Youtube: https://youtu.be/GlKjlVCEYps
--------------------------------------------------
--------------------------------------------------
Other interviews:
Zoran Sarabaca: https://youtu.be/OLqszNP7yHY
John Andrews: https://youtu.be/vmGWbd2y5x0
Chris Daigle: https://youtu.be/jHWzFGRbpD4
Arturo Henriquez: https://youtu.be/uwN7y8AE4EQ
Joe Valley: https://youtu.be/ZQLdybxcZKs
Christopher Wick: https://youtu.be/xhIf9ltgedA
Jonathan Brabrand: https://youtu.be/oC82Ls54CXo
Carl Allen: https://youtu.be/VIU2Lqj_FY4
Klint Kendrick: https://youtu.be/eJ2GICCj2TA
Walker Deibel: https://youtu.be/xoUH_Ixeook
--------------------------------------------------

Ronald P. Skelton - Host -

Reach me to sell me your business, connect for a JV or other business use LinkedIn:
Ronald Skelton: https://www.linkedin.com/in/ronskelton

Have suggestions, comments, or want to tell us about a business for sale
call our hotline and leave a message:  918-641-4150

 

Transcript

Ronald Skelton  0:06  
Hello, and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.

Hello, and welcome to the how to exit podcast. Today I'm here with Juan. He's the CEO of Boopos. Boopos helps talented buyers acquire businesses and brokers close their self mandates, by committing and flexible financing for buying ecommerce and software as a service businesses. Join us today as we discuss why create blue posts? What are they look for as funding criteria and what are the key factors it takes to get an acquisition of an E commerce or software as a service company funded. Welcome to the show Juan. Man, it's great to have you here today.

Juan Braschi  1:04  
Thank you. Great to be here.

Ronald Skelton  1:06  
Awesome. So you know, where I always like to start is kind of getting people to know you, know where you're from what you're up to his stuff? Can you tell us a little bit like kind of your origin story? How did you get into mergers and acquisitions and stuff? And then we're gonna jump right into Boopos. But first, let's just talk a little bit about kind of what drew you to create something like this? What is your background?

Juan Braschi  1:28  
Make sense. I mean, I, I like to say that I'm a finance guy. But at the same time, I'm a tech guy, I studied engineering. And I remember that my final degree project was an automated trading system. So we looked at public companies, we looked at a number of metrics, and we had a system that invested automatically in this company. So I've always had this idea of using data for making investment decisions. And then over time, then I fresh from school, I joined an investment bank, I joined Merrill Lynch, I spent a couple of years there. Then I joined a local private equity firm. And throughout all that time, I always had this feeling that there was a factor or a level of randomness in the way people access financing or getting invested in their companies. And I always wondered why like, it could be, maybe you were not inspired on that investor meeting, or maybe you didn't have the right connections at the right time. Or maybe your business was really good. But then something happened, and you didn't get access to that financing. And I felt it was somehow unfair. So I always had that in the back of my mind. Then I joined a company called Cabify. So Cabify is like Uber for Spain. And in Latin America. I was the CFO there for like eight years. And during that time, I when I got to raise, like 500 million US dollars in funding for the company. And again, I you know, several times, I had the experience of being about to close a funding round, and then something popped up in the last minute and, and then it didn't happen. And again, this kind of also inspired me to get this. I mean, there was something to be done with this factor of randomness and getting financing. So at some point in my, but that was the end of 2020, I learned that they had all these big companies for SEO birds, etc. That were acquiring Amazon businesses by looking at metrics that they could extract from their marketplaces. And I thought, well, this is exactly what I was looking for, for the last 20 years. So I my first thought in late 2020, was let's start an aggregator and let's invest and let's acquire businesses just like thrush SEO does. And then I got in touch with all these business brokers that were selling online businesses, and I learned a lot of what was going on there. So you had all these buyers looking at businesses, in many instances, they just didn't have access to financing. Because they were not like big firms like trust your I myself, experienced trouble raising money for this particular use. And I thought there's there's a big opportunity here, we can help a lot of people acquire a business, if we're able to structure a financial product that is easy to use, that is quick, and that is actionable, using an online process. So that's exactly why I started mobile. So this came to life. In early 2021, we started lending in around April 2021. And so far, here we are, I mean, we're we're, we funded like 30 people. Now, they all are in the mood of acquiring more businesses. And we were getting great reviews. It's apparently we're doing something that is definitely useful. So so happy to be here.

Ronald Skelton  4:53  
Awesome. I appreciate you coming. So it's interesting when we first reached out I had you You and I had a little bit of an interview beforehand, because I kind of wanted to see what it is you did, and how it worked. Mainly because inside of the space of mergers and acquisition, and when I say that we're not talking about these billion dollar deals, you know that the investment banks go after, you know. My audience, the group, the people that I run with, where that what we call a small to medium business, you know, mergers and acquisitions. So, if you look at that, it's not uncommon, it's fairly easy to get funded for asset rich businesses. So you have the Small Business Administration, you have stuff like that. So if we have provable assets, and in some cases, even really solid contracts, like recurring revenue, contracts with the government stuff, you can use those as collateral for certain types of funding to buy the business. But in your space, ecommerce stores, Software as a Service acquisitions and stuff, it's the I guess the rumor kind of is you better have the money in your pocket, or you got to go raise private capital from investors to do it. Because there's there wasn't, you know, there just isn't that much institutional money laying around, geared up and ready to learn into those spaces. So let's talk a little bit about kind of what you create. What did you see you covered a little bit of it just then, but what did you see in the marketplace? And, you know, why create a solution to that? What's the what's the scope of it? I'm sure you guys did some research on like, what's the scale and scope behind ecommerce and software as a solution business for sale out there today?

Juan Braschi  6:38  
Makes sense. I mean, in general, you said it, right? The SBA is looking for assets, or is looking for personal guarantees. In many instances, we've seen ecommerce businesses and SAS businesses qualify for SBA. But then you need to use I mean, you need to get personal guarantees. So let's, let's say that you're borrowing $1 million, and then the business doesn't go well, for whatever reason, then you'll end up paying that debt for life with your own assets. So I think that basically entrepreneurs they, they take a lot of risks, they take low salaries for a long time, they just move from corporate careers, or whatever they're doing, where they could earn a lot of money and have like a very predictable type of career. And they're betting a lot. So I guess that having this personal guarantee type of their mean, their financing is just not variable. So that's one thing. And then the other thing is that in many cases, they just don't qualify for SBA at all, because they don't have the assets because they don't have the track record. We've seen some SBA lenders using cash flows rather than then than assets for financing. But still, they're not comfortable with online businesses, because they don't understand it. So that rewinding to how we started this business, we were going to be acquired, right, we were going to acquire businesses, so we developed a whole process for analyzing businesses, that was kind of the embryo of our current underwriting model. And so when we look at businesses, when we underwrite businesses, we look at them as if we were going to buy them, so we look it from the same lens as as a buyer. And that's super important, because we take risks that maybe banks are not comfortable with. And so that's why we can help all these these people.

Ronald Skelton  8:32  
So in the reason the SBA wants asset rich things, and even if you look at their loan programs, the length of the loan and the criteria, or the way you call it, how the loan is structured, whether it's a seven year or 30 year note has a lot to do with what assets are attached to the business you're buying. So if you have real estate attached, you know, you can do a longer loan and spread the payment out over more years than if it's just assets but you know, they're risk adverse in the fact that the asset the reason they want assets is if you destroy this thing, they want something to sell to recover part of their, you know, part of this thing on a SaaS company, and oh, and or a lot of E commerce companies if you buy this thing and you don't run it well and you run into the ground, there's just there might be some inventory on E commerce but not enough probably to cover the acquisition expense that was laid out. How do you guys protect yourself? Is it just you evaluated as if you were buying it, make sure it's a great buy? Or is there any other way you protect yourself inside of that?

Juan Braschi  9:37  
So we take security over the assets themselves, which as you said, they're not real estate assets. They're just, it could be an Amazon account or or tools, clients etc, attached to the specific product that they're selling or to the selling stuff, whether the selling tip, the bride etc. That sounds like not very solid collateral. But in our I mean, what we think of is that we have a covenant that says that if revenues go down 20% year on year for five consecutive months, then that's, that's an event of default. And obviously, the first approach is to negotiate and to find an agreed solution or maybe a partial prepayment that changing the terms. But if, if that doesn't happen in a short period of time, then we will take over the asset. So what we do is take over the asset before it gets damaged beyond repair, so we can just sell it straight away and recover a part of the apart of the of the loan of the principal.

Ronald Skelton  10:42  
So I'm an acquisition entrepreneur. And that's kind of the nickname that we're adopting in this space. I think Walker Deibel guy that wrote by that and built he, I think he might have coined the phrase, it might have been around before them. And I'm pretty sure that that's the first place I've ever seen it is in his book. So acquisition entre-, entrepreneur, somebody who buys a business rather than build it. I'm out there looking at, say, Empire, flippers, or flippa.com, or, you know, one of the other sites, I find an e commerce Store that I like, I'm really interested in, what is the criteria that I need to bring? Or what do I need to show you guys, what do I need to present to Boopos to get your interest?

Juan Braschi  11:27  
First of all, I it's good to mention that we pre approve a lot of deals. So if you find a deal at Empire, flippers, quiet light, or or whichever other broker that you look into, there's a good chance that we have already pre approved it. So we have like a listing space where you have all the pre approved listings from all the brokers, and then you can just go there and take a look at that. And I guess that if it's not pre approved is because we just didn't, it didn't go through our underwriting process. But other than that, what do we look into with basically, we have like two blocks, one of them is what we call the quality of revenues. So that's, that's kind of different for an E commerce from an Amazon or for a SaaS business. So for us as businesses related to the stickiness of the client base. So we look at cohort metrics, we look at how, how high or low is the churn and how the users are being acquired and then retain. That's the type of thing. And then for Amazon businesses, it's more like positioning within the marketplace, like whether the products are well ranked whether the competitors are having better reviews, or worse reviews to the product, the selling, these type of things are good predictors of continuity in revenues. So that's, that's the first block. And then the second block is more like financial metrics. So we look at the p&l for the monthly p&l For the last 24 months. And we extract a number of metrics. So we take into account seasonality, growth, acceleration or deceleration in growth in the last few months, we like we take a look at margins. So it's kind of important for us to have businesses that have healthy margins that can repay our loans. And we look at advertising costs as a percentage of revenue. So businesses that have more than 15% of advertising costs as a percentage of revenue are usually that's usually a sign that their organic presence is not so strong. So that's we try to stay away of that, we need two years of track record. So in some instances, We've financed younger businesses. But in general, that penalizes a lot in the whole process. And I mean, we're looking for businesses that are profitable, so they can repay us, we really don't need super high growth, it's 10 to 20%. Year over year is fine. And we look at businesses that have a very solid revenue base, or revenue streams. That's that's the type of things we'll look into.

Ronald Skelton  14:00  
So we're prior to the call, I actually I guess I didn't do enough homework, I didn't see that you actually pre approve some of the listings, I see listings. I'm actually on your website now. At boopos.com. And I actually see under the acquire a business do you actually, you know, you have Amazon subscription based stuff in there. Stuff from Empire Flippers stuff from what's the website, closers.com and some other acquisitions sources? So multiple pages of them? That let's say, I'm going through this, I find something I like, maybe I miss it. You just said that. But what's the criteria of as me a, as the acquisition entrepreneur, you've already you've approved the business, what is what is the buyer and the operator need to bring to the table for you to say that the buyer and operator is a match to the business.

Juan Braschi  14:52  
Yeah, Ron, I must say that you did your homework. It's just that it's something very new. We I think we just deployed a couple of weeks ago, and it's good getting very good traction. But yeah, it's new. And yeah, you I mean, what you said makes a lot of sense. I mean, we pre approved the business. But then, as part of the underwriting process, we have to look at the buyer. We don't underwrite the buyer from a financial perspective. I mean, we given that we're not taking personal guarantees, whether the buyer has good financial standing or not so good, is not so relevant in our analysis, but we look at management skills, we look at commitment into the business, we look at how are their track record in owning buying operating businesses, this is the type of thing we look into. And we do that by having a personnel interview and going through all these topics and interacting with the buyer over over time and throughout the process and making sure that we're partnering with, with the right person with the right operator.

Ronald Skelton  15:52  
Awesome. Now, you've got the right buyer, you got the right operator, is an, I noticed earlier you said something about you protect yourself by making sure there's not a significant decline in the business. So is there a quarterly reporting, and you got to have access to my financials on a quarterly basis, a monthly basis? Or what does that look like?

Juan Braschi  16:14  
So before closing the deal, or basically at closing, you will have to connect your merchant accounts. So we will have access to revenues. Actually, we're a revenue based lender, so we will charge a percentage of revenues. So we will, we will track revenues every month. That's one thing. And then we will also ask for a connection to the bank account. So we can take a look at all the statements and movements of the bank account. So with those two things, that's that's good enough in terms of reporting, etc, you don't you wouldn't need to worry about about sending us financials every time. That's That's good information. What we also asked is for the annual tax return. And if there's an audit, then audited financial statements, usually at this size of business, there's no audit. But yeah, that's something else that we ended up winning.

Ronald Skelton  17:07  
So awesome. So we have a lot of new, I wouldn't say new when far as business goes. But new as far as acquiring a business listeners, people who are just getting into the acquisition entrepreneur space, they've run businesses before they might have even sold or exited, or they have a current business and they want to acquire to grow. What, what inside of the inside of this process, would you say indicates you've already pre approved these I assume that you like these businesses? But how would you if somebody was wanting to grow their business or acquisition and maybe add a software as a service to their company? Or add one of these, you know, Amazon brands or ecommerce stores to their company? What What is it good slight selection criteria, you're you're looking at this through the eyes of an investor? What do you guys see as makes a good ecommerce store?

Juan Braschi  18:08  
First of all, I guess that there has to be a match between the experience of the buyer and the ecommerce store itself. We, for example, we recently lend to a woman who was running a content site related to motherhood and tailoring, etc. And she was planning to buy a stroller and push chair ecommerce store. So it made a lot of sense because she was going to direct traffic from her content sites to the ecommerce store. And she has experience in that segment. So I guess that and that's something that business owner future business owners and buyers usually tend to do very well, like they'd like to focus on, on businesses they can manage, and then they can they can take take to the next level. From our perspective, we like to partner with that type of people and make sure that there's a match between the business and the buyer, and from the business standalone. So what does a good ecommerce look like? Usually they have a good SEO positioning, they have a good authority in terms of the things that are selling and, and the way you would get to it organically. They usually have recurring clients and it depends on the product a little bit, it could happen, or it could not but if you connect to the Shopify account, and you see that there's a lot of recurring sales, then that means that the customer base is loyal and then we'll probably keep on buying products from the same store. So I guess that those are some factors that are good predictors of a good investment. And we use that in our underwriting process, but you know, it will depend on the specific business.

Ronald Skelton  19:55  
So inside of this space, is there any you know, inside of the E commerce, the software as a service space, are there any things out there that you would say a red flags, like if you were if we were out there, not looking at your pre approved list, but if we were out there and we find something or somebody comes to us, and they want to sell us a business, is there anything that said, you know, it's just a huge red flag that would tell you that probably shouldn't look at that.

Juan Braschi  20:21  
I mean, I mentioned profitability before. And this is, I mean, I guess that there are businesses that can be turned around, which is fine. But I mean, if you have very same profitability, then it's gonna be a challenge to repay our loan. So we don't want to basically we want to make sure that we'll end to people that can pay and, and so profitability is important also, because if you want to grow the business, you will need some room for investing in marketing and buying additional inventory. And, and while we can provide follow on financing for that, it's, it's useful to have profitability, so that that would be one of the key factors, then, I mean, I guess that we're pretty flexible, we've kind of approved many different types of businesses. I also was mentioning that there's some categories that we just cannot land on. So supplements, jewelry, these type of products, also low, low price electronics, where there's a lot of competition from Chinese providers. That's the type of thing that we cannot lend on. And it's usually because it's hard for us to assess the, what I said, why they call before the quality of revenues block of our underwriting model. Because in the end supplements come and go, it's it's kind of hard so that that will be something that will be an overall for us as well. But I guess that I mean, these are not businesses that are essentially. But I mean, I wouldn't tell anyone not to buy that business, just because we cannot land on it, it's just that you will have to find another lending, financing source. Right?

Ronald Skelton  21:59  
Right. So I clicked on the amount of your financing so that I can get see what the biggest one is there. There's a couple on here that are you know, you guys are willing to finance over a million dollars on, but at the asking price on that is 5.5 or 5.25, 6.8 million. And looks like you're financing this one. What is the assumption that you know, that the rest of the money is coming from? Is that from the buyer? Is that from a seller financing structure? Or what is your expectation of the of the remaining balance coming from?

Juan Braschi  22:34  
And that's a good question. So basically, we limit to, we're limited to 1.2 million, that's our maximum lending amount. And that means that for bigger deals, we might not be as useful as for smaller deals. Over time, we expect to overcome that barrier and be able to learn up to three, maybe 4 million. So these deals, we could potentially in six months, maybe 12 months, lend the full amount. In the meantime, we just produced this time sheets, because the sometimes useful actually, we've seen buyers that have a lot of equity. And then a deal can be arranged with a seller note plus some equity plus our loan. And even in some instances, we might end up being compatible with all the sources of financing, we could even be a partner for an SBA loan, we could be junior to that if obviously, there's this big amount. So let's say that you have a 30 million loan from SBA, then you can add 1 million for us as a junior type of lender and then 1 million in equity. That's something that that could be done. So I guess we're, we're flexible and we try to adapt to, to every situation to be fair Ron, in most instances, in most instances at these bigger deals, we ended up not lending because they usually find that other sources of funding that are well structure for these types of bigger deals.

Ronald Skelton  24:01  
I asked that for that's I wanted to see how flexible you guys were. And that's, that's exactly the answer I was kind of looking for is, you know, it's the deal structure. A lot of times you know, when when you're out there working these deals, you'll find yourself where you're almost there, you're you know, like on these the asking price is 5.25 you got to sell or to do sell-, seller carry back for you know, four of it and you got you know, two guys coming on for 500k apiece, you're at five and now you know you need to you know, you need just a little bit to push you over the line. So the fact that you guys are flexible and can work in that in that realm is it's very beneficial to the guys out there doing the work like you know, myself and some other people. What are, one of my favorite things to always ask is are there any like kind of preconceived notions or like wanna say false beliefs in the E commerce is If space I mean, one of the one of the beliefs I have is SAS, SAS software as a service are grossly overpriced, meaning that the sellers of the software as a services are wanting, you know, multiples that are just absurd in every other market. What what is? Is there any out there like, you know that you can, you know, say, hey, there's great deals in this space anyway or, you know, are there other kind of myths, or disillusions as I might want to refer to them in this space that you guys know better? Yeah,

Juan Braschi  25:35  
Actually, you mentioned that an important one. I mean, if you look at ecommerce deals, they usually price that maybe 2.5, 3 times, sometimes even four times profit, or as the if you look at SAS businesses that might be priced between five, six times. So you're paying a premium for that. Is that something that doesn't make sense or is absurd? I don't think so because many of these software businesses have very, very sticky client base. So that's something that no one can take away from you. And then there's, in many instances, we've we're seeing a lot of growth in them. So that's something that obviously you have to factor in the in the price. What is true is that in many instances, some people believe that just because they have a SaaS, they deserve a seven times multiple. And that's not the case, I guess, that you have to differentiate between good SaaS businesses, and not so good SaaS businesses. So there's definitely a misconception that we have to work that we have to work with. And we have to talk through. Another misconception that we've seen quite often is that just because a deal seems a little bit too big for you, it just cannot happen. If you have a motivated seller and you're motivated to buy the business, you can end up striking a deal. So basically, we've seen sellers, having seller notes up to 30 to 40% of the price of a business. And I know that that's not the market, usually. But in some instances, we've seen that we've seen lenders pushing things, and providing bigger amounts, and we've seen buyers finding equity for a business that they really think it can work. So I guess that in some instances, it feels like I just I want I want to pursue this opportunity, because I don't think I'm going to make it. But in the end, if you're motivated, if you'd like the business, if you know the business and you think you and you have a business plan, that there are, chances are high that you gotta find funding.

Ronald Skelton  27:39  
I can see that. So you guys have been around since would you say like 19? Or 20? What was the year you started?

Juan Braschi  27:46  
Late 2020. We were live in early 2021. We started,

Ronald Skelton  27:51  
you guys started late 2020. You got up and live in 2021. So right at a year now you're going into you're working on your second year. Are you guys, how many deals have you actively funded at this point? Are you willing to share?

Juan Braschi  28:06  
We funded thirty, 30 people. Three different buyers, and a number of them have repeated or are looking to repeat.

Ronald Skelton  28:15  
So that's that's pretty good. If you look at a lot of what other venture capitalists and stuff like that do, you know, somebody can correct me if I'm wrong, but 30 deals in a year seems like quite a bit to analyze, evaluate, and and do so that's pretty good volume or you're actively actually looking and funding businesses. Now I notice you also said they can actually get funding for growth. So you do funding for the acquisition of the company you do funding for growth. What are the other is that the two main things you focus on? Or is there other other stuff you

Juan Braschi  28:50  
Those are the two main things we focus on. And I would say that our core product and our focus is acquisition financing, so but if you're buying like an Amazon or an e commerce store, in many instances, you will require follow on financing because you grow in the company, you need to buy inventory. So it makes sense for us to structure like a follow on growth loan. Sometimes we have also seen people who are actively looking to buy business and they already own a business. So they need a growth loan for that business while they seek to acquire more businesses. So again, in that situation, it also makes sense to provide the growth loan. But yeah, the core and our strategy is all kind of revolving towards our revolving around lending for acquisitions.

Ronald Skelton  29:39  
Okay. What are the like, walk me through the process. I reached out to you I'm a buyer. I'm looking for one of these. I've reached out to you. I fill out is it all online? I fill out forms online. There's an interview, what kind of questions would you ask me as the buyer and then when you do the, so start with that this is what questions would I sometimes that questions, let's just just do one at a time? What kind of questions would you ask me on that first call as a buyer, like, kind of walk me through that.

Juan Braschi  30:12  
So I guess that I mean, this two things here. One is the process with our origination team, which is a live process where you interact with your donation team. And that's kind of like an ongoing process throughout the whole acquisition. And then on the other hand, you have the our online app, for applying online and providing all the documents etc. And they can just proceed at the same time, more or less. So usually, the process starts with an interview with our integration team. And that's just for kind of setting a little bit, the way we work, explaining how the product works, explaining how we interact throughout the whole acquisition process. And, and we also get a sense of the background of the buyer, the amount of money that he's willing to invest, and I'm talking about our equity, we need buyers to invest alongside us. We look at the experience. So it's kind of what we call a pre qualification to make sure that we can we can partner with that buyer. And then then comes the online process, which is, it's pretty straightforward, you can just apply online, it's like a very linear process where you just upload the p&l for the last 24 months, maybe an info memo that you have from a broker. Some other information that you have gathered in the in your process of understanding the business. And if you have an LOI that you can upload the loi, but usually most of the buyers apply before sending an LOI to make sure that they have access to funding and make sure that they can meet and enclose a deal before sending an LOI. And then throughout the process, there's usually more interaction with that orientation team. And that's where we end up proceeding with an interview where we ask the type of questions that I said before, like, have you managed the business before? What type of business have you managed before? Do you have a business plan for this particular business? And what type of due diligence do you expect to perform? What type of resources are you going to commit in terms of managing this business? That's that's the type of questions that we ask. But I guess that it's a more kind of interactive or organic process, there's, there's a number of conversations throughout the process, because in the end, acquiring a business is is a complex process. And there's a lot of interaction, there's a lot of back and forth. And we use all those small interactions, to understand whether we're partnering with the right person or with someone that we're going to be able to deal with for the next five years. Because in the end, that's that's what we look into.

Ronald Skelton  32:52  
That isn't about asking, what is this? What is the structure of the, you said they're a revenue based loans? So you're taking a percentage of revenue to pay back the loan? What do you see kind of as the, I bet, it's done off risk and stuff, but what is the range of like kind of interest rate or how that works and duration of the loan.

Juan Braschi  33:12  
So we are targeting a five year average repayment period, and an absolute multiple of 1.6 times. So that gives you more or less the idea of the annual absolute return that we'll look into, which is between 12 and 15%. We charge monthly installments, so we collect revenue every month based on a percentage of the revenues of each month. And, and the revenue, the percentage of revenues depends on the amount that we're learning depends on the margin of the business. So it's not a set amount. And yeah, that's, that's more or less how it works.

Ronald Skelton  33:58  
So you, you set those based off of the revenue of the business and the profit margin, so that I mean, because if you said 25% of revenue, and you're not making it 25% profit margin, the company just can't survive. So it looks like you, you evaluate what basically stays in the business and you take a percentage of what you call it net revenue or whatever. Net Profit instead of gross somewhere on that run, right?

Juan Braschi  34:22  
So yeah, so basically, if that is making 25% profit, but I mean, we would just target taking between 15 and 20% Maximum royalty every month, just to make sure that there's enough cash flow and enough headroom for making the business growth. Grow.

Ronald Skelton  34:43  
Okay. So I got I came to you we did our first interview, we buy the business you guys fund it I'm submitting in my my you guys have access to my my internal systems, whatever. You can see my revenue and stuff. Are there any others, things that you do for these for these individuals? It looks like there's a play to as your pre approving these does your algorithm was? Or does your team actually identify areas where, hey, we've got another one out there, there's another one available that would really help you grow. It's right in your target space. Do you do you encourage the purchase of other like similar businesses to help these guys grow?

Juan Braschi  35:24  
That's it, that's something that we do. Yeah, that's something that we do, we're implementing an algorithm to do it automatically. But right now, it's our team, just looking at businesses that come our way. And we have a comprehensive database, where we can see the interests of each of our clients. And we're using that data for ascending businesses that way, because, I mean, I would say that 90% of the people we work with are planning to buy, they're not aggregators, they just don't want to aggressively buy 10s of businesses, but they're, they like to be business owners, and they are definitely motivated to own two, maybe three related businesses, our portfolio of maybe up to five. And so that's why actually, we get very good feedback of the product. So it makes sense for us to push businesses that way.

Ronald Skelton  36:15  
One, is an excellent way for them to grow, right, it's just pick a niche, like, if I had a holistic, organic type of natural product, it's in the luxury space, and you come across somebody who's selling something in that space that fits my luxury, you know, buyers, you know, they like high end products. It's natural, organic, or some all fit in that holistic kind of view. You know, it only makes sense if I've successfully run in something for you, and or not for you. But for me, and I'm paying you on a regular basis, and it's growing, that you'd want to help me grow even further by going, Hey, there's another one here, you should probably pick this one up, right? Because I've got a proven track. I mean, if I was sitting in your shoe, I'd want to loan more money to the guys with proven track records. Right? Like they're up there rotting. Here's another one, let's put this on there. You know, and so, this Boopos, do that type of advisory? Or is your I know you're talking about algorithms and stuff? Are you currently doing advisory services in the space? Or is it pretty much just loaning and monitoring?

Juan Braschi  37:18  
It, our business model is lending. That's where we make the money. But we do it, we obviously do that we send businesses, to people where we feel this opportunity, because we get the chance of lending more. And as you said, we want to lend on people who have good track record. So it makes sense for us, well, we don't charge any type of advisory fees, we leave that to the brokers we like to partner with brokers and and that's we're in our place, the brokers are in their place. And that's the way it should be.

Ronald Skelton  37:50  
Let's talk about source of funds for just a second because I know I have I have myself and other people have source of funds to to invest. Do you guys you know invest your own money? Do you borrow money from the banks? Do you did? Or did you do like a raise a fund? You know, what is the source of money that you're lending out? And how do you how do you grow that? Because I you know, over time, it sort of grow through interest and other stuff. But there's I mean, are you are you still bringing in investors? So how does that work?

Juan Braschi  38:19  
So we close the funding round in December 2021. So we have basically we have VC investors in our cap table, that's part of the equity. And that's how we finance our company. But then for funding the loans we partner with, with a UK hedge fund called Fasanara. So these guys are specialists in in FinTech in lending businesses. And they set up a specific structure for us. So we can I, at this stage, we will be able to lend up to 200 million in the next, in the next 12 months. We have to be careful with that. But these these guys are very, very good partner, they have billions of assets under management.

Ronald Skelton  39:04  
That's awesome. So you're you long as they meet the criteria, you guys, you guys can create the volume. So that's what I was going to like, where I was headed with that question is, you know, are you going to run into a point where there's more people wanting to borrow than you can lend, but with a background like that looks like you guys can, if you're careful and meet their criteria on a regular basis, you can continue this, you know, moving forward. It's always there's always a question about that, like, for me anyway, when I'm looking at company it's been around for less than five years, is what is the risk that, you know, I acquire a business I set up a structure with you, and all of a sudden you have trouble, right? Is there anything? Is there anything inside of the notes or anything like that where they could get called do if you guys are in trouble or is it just structured as it's five years, kind of like I own or finance a lot of houses, if at any at any given time, if I get hit by a bus, whoever it gets those notes has to live up to the know contracts are there. If somebody acquires them assumes the rights of them or anything else through through my trust or whatever, they still have to adhere to that contract. What's the risk to a acquisition entrepreneur? If something happens to Boopos? Is it is it contractually sound?

Juan Braschi  40:19  
I mean, we are a principal lender. So we are the main counterpart. And well, the only counterpart. And I guess it's it's kind of pretty standard terminology in terms of the legals. So what happens is somebody something happens to propose in principle, nothing, you still have to pay your debt as is in the contract. That's, that's the way it works.

Ronald Skelton  40:45  
Yeah, I expected that. But you have to ask, right?

Juan Braschi  40:49  
Yeah, so no way to get rid of us. So

Ronald Skelton  40:51  
I wasn't worried more about the, you know, you know, not having to pay it. If something happened to you guys, I was more concerned that whoever acquires you can change the terms of the deal. Right.

Juan Braschi  41:02  
That's, that's not the case. I mean, our contracts are fairly standard, and they follow standard practices,

Ronald Skelton  41:08  
Yeah. You would had, you would had to have specifically added something into the contract to allow it to be adopted to a new buyer. So that's why I was asking. So we've been on here for about 40 minutes, we're hitting close to that top of that hour stuff. Is there any key hot points you'd like we should have talked about or things that, you know, you feel that we really need to let the listeners know about?

Juan Braschi  41:30  
Well, I guess that the market is pretty hard with, we still see a lot of people, I mean, there's there's some that we might want to discuss the opportunities that are out there, right, we still see a lot of people buying businesses and trying to buy businesses, the online space is super hot. And I, I mean, some something that I'm experiencing is the interest of the buyers shifting from asset class to asset class. We, for example, we get a lot of inbound requests for content sites. That's something that we didn't see before, we're not getting so much interest for Amazon. And I guess that there's a reason for that it was super hard a couple of years ago. And now it's not so much. But still, they're very sound businesses and I if if I were actively looking to buy businesses, I would definitely look into buying Amazon businesses. And, and this is the type of thing that that I get to discuss all the time with, with the business brokers, right how the space is evolving, and what the trends are in acquiring businesses.

Ronald Skelton  42:37  
So if you've listened to previous shows, you already know I have a bias against Amazon businesses for the sole purpose of I don't want to invest in anything or put my all my eggs in anybody's basket where there's a single or sole decision maker who could ruin my day. Right? If you look at a lot of the content made for others, you know, 10, 15 years ago, now, it's been a long time. There were a lot of these made for AdSense type of businesses, I have friends that were doing really good with that. And then Google changed their algorithm. And these guys were nearly broke. I have friends who had some really cool ecommerce plays that were 100% affiliate marketing, a lot of them were using Amazon, one of them I can think of right now. I won't say his name on here, but he had an E commerce type of website where he did reviews on sound equipment, audio equipment, and stuff like that. And was making high six figures with his Amazon affiliate, they stretch their structure go from I wanna say he was like, 10% to 2%. And he's absolutely it barely covers his marketing cost, right? It really literally destroyed him. What is your gut feel on? Like, buying a business like Amazon, you know, an Amazon store, and having the risk that they just decide to take that product in house and sell one of their competing products with it, or for some reason or another change policies, rules or whatever, and make it really expensive for somebody own in the store to succeed. 

Juan Braschi  44:12  
Yeah I, had a few scary stories, too. I guess I had more scary stories at the content space than at the Amazon space itself. In I mean, the Amazon marketplace is huge. They have made changes, but it would just kill themselves, like Amazon, just pushing too much on their suppliers or the or the sellers will be just it would be it wouldn't be beneficial for them at all. So I don't think there's so much of a risk. But yeah, we've seen changes in the rules of the marketplace. And we've seen sellers needing to adapt to those rules, but we haven't seen that many sellers been squeezed out of that of them marketplace itself. Whereas we've seen changes in the way advertising works that have made businesses disappear from one day to another. And that's why we're very cautious with content business as we're starting to explore them. We want to underwrite them, at some point in time we financed, I guess, one, as an experimental type of loan. And so we can learn a little bit. But we still had to learn a little bit more about how to protect yourself against this kind of Black Swan type of events.

Ronald Skelton  45:40  
You know, it's interesting, as you had the same answer the last three guys, I've brought that question too, because they were like, Yeah, you gotta buy Amazon stores and like, yeah, Amazon gets crushed, you know, stuff on your big toe, anytime they want is they all three answered, and you just answered pretty much the same thing, that the Amazon marketplace, that these stores are such a significant portion of their revenue. If they harmed those individuals, it would hurt themselves considerably. I get that. So maybe it won't be overnight, but I'm just still concerned about the grind, you know, and they make gradual changes that benefit them more, I guess, a good example would be the fulfillment by Amazon, right? Fulfillment by Amazon is fairly pricey. I know, I've been talking to two different people that are like familiar with the aggregator space, and some of the aggregators out there. The reason they're doing what they're doing is they're buying these businesses that do Fulfillment by Amazon. And the aggregator itself has its own logistics and own ability to do fulfillment. And that's how they push the profit margin way up, they buy very profitable stores that are using Fulfillment by Amazon, and then they take over the fulfillment side of it, and, you know, push the profits up. But, you know, so

Juan Braschi  46:57  
On the other hand, usually, Amazon tries to give more visibility to FBA products, rather than to FBM products always. You know, it's a two fold type of decision, right?

Ronald Skelton  47:13  
Do you? Do you ask your, like your Amazon brands and your Amazon stores to actually do anything like, have a second like Shopify store? Or you just let them run the way they were set up?

Juan Braschi  47:24  
Yeah, we're not operators. I mean, we don't want to get in the middle of your strategy. And we do let them decide. Yeah.

Ronald Skelton  47:30  
Cool. Well, we're we are at close to the top of the hour and stuff. Is there any last thoughts or any things you want to say? I do want people to know that we have your connection information on the screen. And that's one and I'm not going to even pretend this see your last name for me?

Juan Braschi  47:52  
Garcia Braschi. 

Ronald Skelton  47:55  
Okay, and then I'm going to spell it for everybody. So if you want to find him on LinkedIn, it's the standard HTTPS, dub dub dub.linkedin.com/in. And it's, G A R C I A, B, right? That's, that's his thing. Or you can probably search for Juan, which is J U A N. And then his last name is Garcia, G, A, R, C, I, A and then B, R, A, S, C, H, I. I butcher everybody's name, so I'm not going to try yours. I just know I'm not going to spit that out. Right. I don't

Juan Braschi  48:37  
it just also Googled Boopos right? And- 

Ronald Skelton  48:41  
And that's that's exactly how it's sounds. It's B, O, O, P, O, S, boopos.com. And I would recommend you guys if you're listening this and you're even curious, go dig through that list of companies, they've pre approved and see it. I mean, there's some, there's, there's quite a few, you got five or six pages of them on there right now. And, you know, take a look. And it's, you know, it's with Empire. flippers, Dragon flip, as a lot of the name brands out there. You know, website closers.com, you have a lot of those already pre looked at and you're interested in finding them if you match meet the right operator for it. So I would recommend that the listeners go there. Take a look. I'll put both your contact information, your LinkedIn and your blog post link in the show notes. And, you know, in the description of the show when it comes out. So I appreciate you for being on here, man. I really do.

Juan Braschi  49:39  
All right. Thank you, Ron. It was a great pleasure to chat with you. And yeah, happy to be here and I hope it helped potential buyers and business owners too.

Ronald Skelton  49:51  
I think it will. I think it fulfills a need in the space and it opens people's eyes, right? A lot of people think that ecommerce is hard to fund, Software as a Service is hard to fund, they're gonna have to go the private, you don't hunt down private investors and stuff. Now they know they got somebody else in there on their side that's willing to look at it and help fund it. And they can still do private investors, they may even need to do a little bit of private investor and you guys or you know, multiple, you know, multiple sources to get the deal done. But knowing resources like you guys exist is, well, I think it'll open up opportunities. A lot of people that might have written off, you know, buying an e commerce Store or software as a service, because they didn't think they had had enough funds to do it on their own to be significant. So I think this would be a good one.

Juan Braschi  50:38  
I hope so. I hope so.

Ronald Skelton  50:40  
I appreciate you. And that's the show today. So everybody hang out for just a second afterwards and we'll wrap it up. The investors and entrepreneur roles professional mastermind. The investors and entrepreneurs professional mastermind combines that additional peer to peer mastermind introduce first in Napoleon Hills famous book, Think and Grow Rich, with accountability partnering, where your peers help you ensure that you set goals take action and get results. If you want to scale blow past roadblocks and achieve success faster than you might think is possible. I suggest you take a visit over to tiepm.com That's T i e. P m.com. And check out the investors and entrepreneurs professional mastermind