China’s state council has this week announced it will promote cross-border e-commerce in a growing number of cities in an effort to stabilize trade. Following growing tensions as US tariffs threaten Chinese exports to the US, a batch of new cross-border e-commerce pilot cities will be added to the existing 35 pilot zones. A slight increase in the IHS Purchasing Managers’ Index from 46.9 in May to 47.9 in June (still sitting below the 50-point contraction level) may be supporting China’s continued motivation to increase e-commerce activity, which will help local merchants by creating new avenues for trade development. Total cross-border e-commerce Chinese exports reached $130 billion in 2018, with local Chinese merchants receiving support from the government on VAT exemptions for cross-border e-commerce sales.
The world of digital marketing this week saw IBM-owned Watson Marketing launch a standalone branch under New York-based private equity firm Centerbridge Partners. Watson Marketing’s as-yet-unnamed company will offer marketing automation, analytics and content management services in a more agile operation aiming to compete with Adobe, Oracle and Salesforce. CEO Mark Simpson wrote in a blog post of the initiative, “Marketers and advertisers are burdened with mediocre technology and disappointed that most of the promises MarTech and AdTech companies make aren’t kept.”
FE is excited to announce that our head of SaaS M&A, Kevin Oh, will be partnering with Jordan Richmond at Fidelity, FE International’s preferred SBA lender, in a webinar covering Everything You Need to Know About Buying an SBA-Eligible Business. Topics covered will include:
- Where can I find an SBA-eligible business?
- What do I need to know about structuring an offer with an SBA loan?
- Is an SBA loan right for me?
We will also be hosting a short Q&A at the end of the live webinar, so in order to keep the audience size productive we are only opening the webinar up to 20 attendees. Please reply to this email to let us know as soon as possible if you are interested in attending so we can secure your seat!
New in listings from FE this week, we are pleased to present a Podcast Audio Production Digital Service business. As an authoritative and highly reputable brand in the rapidly growing podcast production niche, this effective productized digital service model is monetized via recurring subscriptions. Launched in 2015, the business’ successful operating history, with more than 40,000 podcast episodes produced for numerous reputable clients, provides a clear value proposition for a new owner. The business will also have an autonomous team transitioning to a new owner post-sale. Please follow the link above to request more information.
In events news, the FE team had a great time at the Running Remote Conference in Bali this past week, meeting with clients and networking with entrepreneurs! Next up, Founder Thomas Smale will be heading to Vietnam for Digital SEO Summit, where he will be giving a talk on how content business owners can improve the value of their business. Feel free to reach out if you will be in attendance and want to connect!
Continue reading below for more on China’s trade initiatives, SaaS market updates and IBM Watson Marketing’s new company.
- Reputable brand with seven years of operational history
- Over 12 million visitors and 19 million page views in the past year
- Hundreds of articles published from authoritative government sources
- Dominant social media presence with over 1 million Facebook followers
Yearly net profit: $270,000
Asking price: $716,000
- Authoritative and highly reputable brand in the rapidly growing podcast production niche
- Effective productized digital service model monetized via recurring subscriptions
- Successful operational history with more than 40,000 podcast episodes produced for numerous reputable clients
- Clear value proposition and glowing reviews fueling rapid revenue growth
- Autonomous team transitioning with the business post-sale
Yearly net profit: $88,000
Asking price: $348,000
- Steady quarterly revenue growth of c.116% from Q3’17 to Q1’19
- Strong APRO growth of 15% over LTM
- Well-received products with hundreds of five-star product reviews
- Diversified product sales with no SKU driving more than 6% of total sales
- Strong value proposition with growing private label product sales
Yearly net profit: $101,000
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- Impressive monthly growth in recurring revenues demonstrated by a c.7.2% CMGR over the LTM
- Simple business operations requiring low owner involvement
- Established a firm foothold in a lucrative and evergreen niche
- Innovative product offering that has reached a strong c.$512 customer LTV
- Downward trending and low customer churn of c.6.6%
Yearly net profit: $32,000
Asking price: $77,000
[Private] SaaS – B2B Shopify App – $50K MRR
In the News
Chinese Trade Activity
China’s state council has this week announced it will add new pilot cities to the existing 35 pilot zones in the country.
This is part of the country’s effort to stabilize trade following US tariffs on Chinese exports, as Reuters reported.
Chaired by Premier Li Keqiang, the televised announcement simply stated, “We will add a new batch of cross-border e-commerce pilot cities on top of the existing 35 pilot zones,” offering no further elaboration. Back in December, China was similarly bullish on cross-border e-commerce exports despite impending tariffs at the time. The Financial Times reported that even in the face of US tariffs on Chinese exports combined with the EU cracking down on major platforms like Amazon to prevent online merchants from evading taxes, local Chinese merchants in Yiwu’s International Trade City expected growth in cross-border sales.
China is a major force in international e-commerce trade, and seeks to maintain its position despite growing tension with the US.
SaaS Stocks at Near Record Highs
The end of Q2 saw SaaS companies’ stocks close at near-record highs.
Public SaaS companies tend to lead the valuations granted to privately held companies, which bodes well for valuations in upcoming exits for SaaS founders. Inability to raise capital, consequently, would most likely be a result of VCs’ disinterest for a given reason rather than market performance indicators. The BVP Nasdaq Emerging Cloud Index basket of stocks is currently worth 1,248.21, just shy of its 52-week as well as all-time high of 1,253.05.
SaaS stocks continue to present strong demand, as was recently demonstrated by Slack’s direct listing on the NYSE and the fact that its shares continued to rise after listing.
IBM Watson Launches Marketing Company
This past April, IBM-owned Watson Marketing announced its intention to launch a standalone marketing operation that would be owned by Centerbridge Partners.
While the company is not yet named, it finally launched this week to provide marketing automation, marketing analytics and content management services. The aim of forming a separate operation was to focus entirely on marketing customers’ needs. This will also allow the new company to rid itself of old processes that no longer belong in the realm of digital marketing solutions. CEO Mark Simpson noted, “With over 1,000 people on day one, we’re far from a small company. And yet, we’re also able to be one of the nimblest and most responsive to industry changes of any other marketing cloud.”
This “agile-first” approach is anticipated to be instrumental in the way the company scales.