Looking to buy or sell an online business? While there are many startup acquisition marketplaces available, BitsForDigits and Flippa are consistently among the top contenders for buyers and sellers of digital real estate.
The differences between the two marketplaces start to emerge when you look at the types of assets listed, the quality of the listings themselves and the buying power of the acquirers.
This article will help you understand the differences between BitsForDigits and Flippa so that you can choose the startup acquisition marketplace best suited to your needs.
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 bootstrapped startups struggle unnecessarily when it comes to personal liquidity events.
Their solution? A platform that facilitates introductions between owners and acquirers with the functionality to advertise full sales as well as minority and majority stakes anonymously. The requirement to list on the marketplace is for the business to generate a minimum of $100K in annual revenue.
BitsForDigits does not become involved in the acquisition process but connects buyers and sellers directly with no unwanted middlemen.
On the other hand, Flippa is a lower-end marketplace that directs its focus toward websites, domains, affiliate sites, and blogs. Founded in 2009, it now boasts more than 300K buyers on its site, although there are no openly stated criteria that a buyer must fulfill to be eligible to acquire digital assets via them.
Flippa offers the option to list assets for sale by auction or at a fixed price. If an asset remains unsold after a period of 30 days, the auctioned listing is automatically converted to a fixed price listing—sort of like eBay.
Flippa advertises its services as an add-on and includes due diligence, legal, financing, and the option to sell privately or with a broker.
If you've been keeping up to date with startup acquisition marketplaces, you'll know Flippa has recently been in hot water. Yes, there are hundreds of thousands of users on their marketplace, but don't be fooled.
Firstly, Flippa's verification process lacks rigor. There have been multiple instances where authentic sellers have been banned due to the number of fake accounts placing bids on listings. Take this as an example.
Flippa is also a breeding ground when it comes to fake listings. In some cases, metrics such as traffic and revenue are automatically verified, but in others, it's all down to the seller's word before it gets listed. And trust us when we say sellers can get pretty creative with scams.
At BitsForDigits, we have a manual verification process to ensure that our buy-side and sell-side are of the highest quality. In fact we reject around 75% of submitted listings to ensure we prioritize quality over quantity.
Secondly, Flippa, like MicroAcquire, allows all types of online startups, projects and assets to list on their marketplace. Why is this significant? Well it means buyers will be inundated with tiny side-hustles and loss-making businesses, listed by amateurs who seek a quick 'flip' or want to 'hot potato' it onto the next person.
At BitsForDigits, we don't deal in failed startups or small side projects. By instituting a $100K annual revenue floor for businesses to list on our marketplace, we save buyers from wasting time trawling through bottom of the barrel listings.
Also, acquirer profiles on our platform tend to be search funds, PE firms and strategic incumbents, to name a few. So on average, buyers are more professional and less inexperienced, meaning they are less likely to window shop and waste sellers' time.
If you're still thinking about buying a business on Flippa, we strongly advise you to read this list of scams you may encounter.
A full acquisition isn't always the best course of action for a business owner or founder seeking a personal liquidity event.
Understandably, as a founder, you're concerned about the long-term viability of your business. What could happen tomorrow? Or next year? Or in five years?
Having all your wealth tied up to a single, rather risky asset (your business) is a problem that almost every startup founder is aware of. But are you ready to give up all influence over your business that you've spent years building?
If the answer is no, our platform has a solution for you. BitsForDigits is the first online acquisition marketplace that allows partial, as well as full acquisitions.
Our platform makes it easy to sell minority and majority stakes in your company so you can liquidate part of your ownership while having the option to retain future upside and influence. And who said you couldn't have your cake and eat it, too?
Well, we guess Flippa did as they only allow full acquisitions. All or nothing.
We don't take any commission from the sale of your business. You heard that right: The cake is all yours to eat.
BitsForDigits remains free for all owners wishing to list their business on our marketplace. For buyers, we'll be introducing a subscription fee in the near future in order to instantly contact sellers of profitable online businesses on the marketplace and negotiate direct deals.
Flippa's pricing, however, is less straightforward. Sellers are charged a variable success fee, dependent on the asking price of the asset. This ranges from 10% for assets listed between $1 and $49,999 to 5% for assets listed between $100K and $2M (if they sell with Flippa). On top of this, sellers must choose a listing package, with the cheapest being $29, climbing to $499.
Flippa also charges buyers, meaning they might actually get paid on both sides of the same transaction. Conflict of interest? I think so.
Let's use an example. Suppose you're a seller listing an e-Commerce site at $2M, and you don't require any additional services. If you sell with Flippa, you'll pay $100,000 (5% success fee) plus your chosen listing package fee. At BitsForDigits, you would pay nothing.
We worry that this commission fee discourages larger M&A deals from listing on the marketplace, leaving buyers with poor quality deal flow—another reason we don't take a commission.
BitsForDigits and Flippa both offer state-of-the-art marketplaces to buy or sell online startups. The difference lies in the types of digital assets listed, the option to partially acquire a business, transaction fees and overall reputation.
So is BitsForDigits a great Flippa alternative? Well, it depends on who's asking. BitsForDigits is excellent for professional buyers looking to acquire real, profitable businesses, while Flippa is great for buyers wanting to buy a small startup or side project or experienced developers who know what they're getting into.
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