BitsForDigits: a great Empire Flippers alternative?

August 19, 2022

BitsForDigits and Empire Flippers both offer high quality solutions when it comes to removing the friction from buying and selling online businesses, and are consistently among the top contenders for startup acquisition marketplaces.

However, the differences between the two are rather fundamental. One is a marketplace and the other a marketplace-broker, so their cost and involvement in the acquisition process differ substantially. 

This article will help you understand the differences between BitsForDigits and Empire Flippers so that you can choose the best option for your needs.

Platform Summary

BitsForDigits was built to help founders of profitable businesses safely attract partial and full acquisition offers for free. After working in finance and tech, respectively, founders Laurits and Jan-Philipp realized that owners of tech startups struggle unnecessarily when it comes to personal liquidity events.

Their solution? A platform that currently facilitates introductions between 1,000s of business owners and acquirers with the functionality to advertise full as well as minority and majority acquisitions anonymously. To list on the marketplace, the startup needs to generate a minimum of $100K in revenue annually.

BitsForDigits does not become involved in the acquisition process but connects buyers and sellers directly, side-stepping unwanted middlemen.

On the other hand, Empire Flippers is a marketplace-brokerage for buyers and sellers of websites and online businesses. Founded in 2010, the platform asserts to have a 75% sale success rate and currently has over 160 live listings. The bulk of its listings is Amazon FBA, Amazon affiliate and eCommerce businesses, although there is the option to buy and sell SaaS businesses.

Similarly to BitsForDigits, Empire Flippers isn't the right place to sell small projects and failing businesses, and its buyers are professional and more experienced who are looking to acquire profitable and sustainable businesses.

Marketplaces vs Brokers

The most significant difference lies in the fact that BitsForDigits is a marketplace, whereas Empire Flippers is a marketplace-broker. But what does that mean for you, as a buyer or seller?

Although Empire Flippers has a vetting process and a dedicated vetting team to eliminate scams and poor-quality sites it's important to remember the broker's goal is to represent the seller.

At the end of the day, brokers receive an up to 15% cut for every deal they close. So although they offer a quick and high-quality service, are they possibly incentivized to close a deal in the least amount of time? 

Its hybrid marketplace-broker format still allows buyers the freedom to find a business they like on their own terms, which isn't possible with other brokers.

On the other hand, BitsForDigits is a marketplace that connects buyers and sellers. We don't get involved in the acquisition process, so you're free to craft the best deal on your own terms. 

Once you create an account and get in touch with a buyer or seller, there is no obligation to move further ahead in the process - it is, in other words, commitment-free. 

Understandably, you may require assistance at some point, but don't worry; we have an advisor directory for expert advice on valuations, negotiations, legal, tax, accounting & due diligence, and a free valuation tool covering eight different business models. 

It's fair to say that BitsForDigits brings transparency to an otherwise opaque private market process.

million dollar payout

Partial vs full acquisitions

A full acquisition may seem like the safest bet for a business owner or founder seeking personal liquidity, but it may not be the wisest.  

As a founder, it's normal to feel your company's long-term viability. What happens when I leave? How big will it grow without me? Who will reap the rewards? 

Having all of your wealth tied to a single, rather risky asset (your company) is a problem shared by almost every startup founder. Exiting completely is one way to solve it, but are you prepared to hand over full control of the business you've worked so hard to build? 

If you answered no, you're in good hands. BitsForDigits is the first online marketplace that allows for both full and partial acquisitions.

Our platform makes it simple to do minority and majority acquisitions, which allows you to liquidate a portion of your ownership while retaining future potential upside and onboarding new expertise from a business partner. 

Empire Flippers, on the other hand, only allows for full acquisitions. It's all or nothing. While at BitsForDigits, you can have your cake and eat it, too.

Commission fees

We at BitsForDigits do not charge a commission on the sale of your company. You read that correctly. The cake is all yours to eat. 

BitsForDigits continues to be free for any owners who want to list their company on our marketplace. In the near future, we will charge buyers a subscription fee to join our marketplace and swiftly connect with sellers of lucrative online businesses.

Empire Flippers, however, uses a blended commission structure, meaning rates are stacked on top of each other. 

For businesses valued under $700,000, Empire Flippers charges a flat 15% success fee on the sale. For businesses worth between $700,000 and $5M, commission is reduced to 8% for any amount that lies in this interval. And for businesses worth more than $5M, commission is further reduced to 2.5% to the value of the business that lies above this.

For example, if a business is listed at $5M:

  • 15% commission is applied to the first $700K = $105K
  • The remaining amount is $4.3M, which lies in the 8% commission bracket = $344K
  • Therefore commission totals to $105K + $344K = $449K

At BitsForDigits, you would pay nothing when selling a $5M business whereas on Empire Flippers, you would fork over almost 10% to the platform.

Although Empire Flippers' tiered commission structure is more logical than traditional flat commission rates, we still think it discourages larger M&A deals from listing on the marketplace, leaving buyers with poorer quality deal flow—another reason we don't take a commission on BitsForDigits.

Conclusion

BitsForDigits and Empire Flippers both offer state-of-the-art solutions to buy or sell online startups. The difference lies in transparency, the option to partially acquire a business, and transaction fees.

So is BitsForDigits a great Empire Flippers alternative? Well, it depends on who's asking. 

BitsForDigits is a startup acquisition marketplace that's great for owners of profitable businesses looking for serious acquisition offers while retaining 100% of the proceeds.

Empire Flippers is a marketplace-broker that's great for buyers and sellers who want a helping hand throughout the entire process and are willing to pay big bucks to get it.

Interested? Learn more about BitsForDigits here, or sign up here.

About the author
Shiv Shah

Shiv Shah is a Growth Marketer at BitsForDigits. He has a background in economics and finance, having worked for institutions such as Goldman Sachs.

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