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Nov. 22, 2021

E:35 Top M&A Entrepreneurs Podcast - Michael Liu - 2 Acquisitions Ecommerce under $1mm in Rev


Micheal is CEO and Co-Founder at Erdos Ventures. Micheal is graduate of Techstars LA '21. Erdos Ventures is a Techstars backed company that leverages technology to appraise, acquire, and activate portfolios of high potential niche e-commerce brands at scale.

00:00 Intro to Micheal Liu
00:15 What / Who is Erdos - why the name origin - finding connections between companies
01:24 His acquisition thesis - what they want to build - an infrastructure layer for small ecomm
03:27 Putting his money where his mouth is...for now.
04:04 Focused primarily on NON Amazon business- not going to compete Thrasio Holdings - important distinction between amazon and Shopify business model - Owning the Customers!
08:12 What he looks for in financial criteria for acquisition - Under $1mm in Topline Rev
10:05 What is it they Erdos brings to a $1mm Rev ecomm business.
12:23 Going thru a sample acquisition scenario... 1. Finding the business, 2. Finding the "motivated" scenario - uncovering inexperienced operators - What Thrasio does..
17:14 The challenges of buying an ecomm business under $1mm in revenue
25:15 Decision making with products - Product Market Fit. products with Ephemeral connection to customer - no drop shipping - ecomm business owns the product.
29:48 How he starts the conversation with seller... reach outs, inbound outbound deal sourcing, understanding the journey - founders story.
31:38 Terms of offer - seeking transition period sellers, and 100% buyouts, multiples to $1mm revenue ecomm businesses - do they have a community around product
34:50 Where he gets his guiding principles from, how he does business, paying for unseen untapped value
35:37 Source of funds to acquire business, a bootstrap start, Techstars LA '21 graduate, actively fundraising for acquisition fund.
37:45 Closed 2nd acquisition recently, 3rd in closing, goal is 5 per year. Deal flow brisk
40:05 Does he have "know when to fold them" - sell. Traditional thought process - cost of holding the company. Smart Strategy to Hold the business...for how long... which eliminates "trending or fad" businesses - more important to ask what problem does the product solve.
44:01 Results from 1st business to date.. 2X'ed revenue 3X'ed conversion ratio, dropped time spent on business by 80% with automation
45:38 How he gets his deal flow - 3 main channels to dig for leads MicroAquire, Shopify Exchange, Referrals
47:00 What his needs - Investors, actively raising capital, connections into eco-systems, motivated sellers,