The success of Peoples Equity Group, a direct-to-consumer, Technology and E-Commerce investment portfolio and aggregator, can be attributed to the philosophy of its Chief Operations Officer Dakota Smith, never start from scratch. “I learned this gem from the first billionaire I ever met,” he recalls. “It made a lot of sense to me, and I kept it in mind as my team and I studied the ecommerce market, looking for its weaknesses and our opportunities. We eventually found one: companies that were generating $5-20 Million in sales. These businesses had already done the hard work of getting to where they were but were struggling to scale up for different reasons. They were also suffering from a lack of investment because they were too big for the $100K investors and too small for those who had their eyes on the $20 Million+ businesses. Once we identified this gap in the market, we stepped in to fill it, and Peoples Equity Group is now helping to grow a market that generated over $11.4 Billion worth of investments into ecommerce aggregators in the last 12 months.
Smith explains that behind Peoples Equity Group lies a model that has led the company to exiting companies with returns as high as eight-fold. “We buy Technology and E-Commerce brands at a fraction of their market value, remove any inefficiencies, find hidden profit potential, and integrate the brand into our advertising team and supply chain to optimize profitability and provide the best possible ROI. We have bought dozens of these companies and used our collective data to scale all of the brands beyond what would have been possible if that data and strategies were not shared through the assets we manage.”
Smith says that the company’s choice of platforms: Shopify, WordPress and other direct-to-consumer platforms, was strategic. The team focuses on native-hosted brands because they can ultimately have complete control over their data. He states, “This is not possible with some of the other major players in ecommerce because despite their undisputed size and traction. Third-party platforms present a myriad of challenges, including ever-changing terms of service, account suspensions, terminations, and, crucially, the inability to own customer data. That is key for supplemental revenue-generating campaigns, such as email marketing, abandoned cart sequences, and call centers.”
Because of the setup of native websites like Shopify and WordPress, Peoples Equity Group owns its domains and customer data. “This allows us to see genuine statistics and key performance indicators,” Smith explains. “There are three advantages to this: we can scale with incredible precision because we have the data. We can also create repeatable processes, and more importantly, we can build predictive models that allow us to start with the brands we have and then let the software tools tell us which brands will be complementary acquisitions.”
Smith addresses the type of companies Peoples Equity Group looks for. The typical company has had 30% of year-on-year growth. Product ratings, on average, have earned 4.5 stars online, and average profit margins have been roughly 25%.
“It may sound counterintuitive, but we also look for companies that have been mishandled, most likely because the founder may not have the experience to guide their company to the next level,” Smith says. “Our team has more than 30 years of collective experience in marketing and other areas of business, so we are able to restructure these companies appropriately.”
Once ecommerce brands are acquired, Peoples Equity Group injects and optimizes them with capital, operational infrastructure, and pre-existing data from the $50 Million of advertising it has run and collected over the last 5 years as a portfolio company.
“It allows us to keep the Founder on, leverage their expertise that made the brand special to begin with, and scale the brand up before exiting it to a private equity buyer, often in rollups up to $100-200 Million,” Smith states. “This allows the founder to get a second bite at the apple since they had a great idea – they just didn’t know how to scale it up to a global brand.”
He adds that along the way, Peoples Equity Group uncovers hidden earnings possibilities and prioritizes minimizing waste, all while planning a digital rollout across all of the company’s assets. “Our goal is to obtain the highest exit multiple possible, and are starting to look at acquisitions with recurring revenue in their model due to the way it positively impacts the selling multiple.”
Peoples Equity Group receives many requests for acquisitions but only accepts five in ten proposals. “We facilitate due diligence for generally 45-60 days and also shell out money for due diligence on ten acquisitions knowing we’re only going to take on a few. We are happy to lose a bit of money on the front end since we know the exit potential,” Smith states.
The company works with accredited and institutional investors alike. Many of its investors have seen their real estate returns dwindle due to a crowded market and are considering putting their capital into an alternative market. They are also seeking to diversify their portfolios to the next big asset classes.
Smith is enthusiastic about the team they have been assembling at the Peoples Equity Group. “I have a group of partners who range from career marketers, to fundraising specialists, to some of the same individuals that helped large e-commerce roll ups IPO. That is the definition of having intangibles in business, and I see the difference in what we do every day at the office.”
Smith reveals that the company is currently working with a prominent middle market advisory firm, who are spearheading a $100 Million raise for the group, and have facilitated debt and equity raises for other fintech and aggregation projects in the past few years. “We are in the process of finishing our due diligence on deals for private placements into some brands. We will be announcing more about this in the near future.”
Smith believes the Peoples Equity Group’s aggregation model exemplifies the potential for e-commerce. “More importantly, though, it gives smaller and overwhelmed brands their deserved platform and expansive realization of what can be achieved with investment and operational development,” he states. “We are helping each founder to maintain their brand’s profitability, all while protecting their ideology and quality. I am genuinely happy that what my team and I do has such a wonderful impact on companies with enormous potential.”
Peoples Equity Group is a Technology and E-Commerce aggregator that helps mid-sized companies restructure so that they can scale up to the next level. You can learn more about the financial strategies behind the success of the Peoples Equity Group when the company speaks at the MoneyShow in Las Vegas on May 9, 2022. The MoneyShow is one of the largest accredited investor events in America, and will be talking about market disruption, technology investing, and investing strategies.
This article is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any interests in Peoples Equity Group or any other securities. Any such offer will be made only pursuant to the company’s Private Placement Memorandum. This overview may include or be based in part on projections, valuations, estimates and other financial data supplied by third parties, which has not been verified by Peoples Equity Group. This information should not be relied upon for the purpose of investing in their projects or for any other purpose. Any information regarding projected or estimated investment returns are estimates only and should not be considered indicative of the actual results that may be realized or predictive of the performance of investments or any underlying project in which the company invests. Past investment results of any underlying managers should not be viewed as indicative of future performance of the company.