Interview #128 : Dom Wells (Onfolio Holdings Inc)
Insights into operating a micro public company.
For this edition we welcome back Dom Wells, Founder and CEO of Onfolio Holdings Inc.
Onfolio Holdings Inc is listed on the NASDAQ with the ticker ONFO. They acquire/operate small digital businesses.
In this issue we discuss the following, plus much more...
- The evolution of Onfolio Holdings since listing on the NASDAQ.
- On the path to profitability.
- Creative ways of raising cash for acquisitions.
- Does buying digital businesses still make sense in an AI world?
- Deal flow and current market environment.
- Adding Bitcoin, Ethereum, Solana to the balance sheet.
- Would they invest in common securities?
- What's the plan for 2026Disclaimer: This interview is for informational and educational purposes only, and should not be seen as investment advice. Please do your own research before investing in any company mentioned.
We last spoke in January 2023 not long after Onfolio Holdings listed on the Nasdaq. How has the company evolved since then?
A lot has changed. When we last spoke, we had a small portfolio and were still figuring out what it meant to be a public company.
We’re still small, but since our IPO we’ve completed seven acquisitions at a blended multiple of 3.3x annual cash flow, grown revenue from $2.2M in 2022 to an $11M+ annual run rate, and built out a portfolio of digital agencies, ecommerce, and online education businesses that now generates meaningful cash flow at the portfolio level.
On the downside, we are still not profitable as the cashflow from the portfolio is consumed by the costs of running a public company.
One evolution has been in how we fund acquisitions. Early on, we used cash from the IPO. That was deployed throughout 2023, and afterwards we had to get creative. Over the past couple of years, we’ve developed a model using non-convertible preferred shares, seller notes, and SPV co-investments that lets us acquire businesses without deploying much or any cash from the parent company balance sheet.
Our 2024 acquisitions added $5.9M in revenue, and Onfolio paid zero dollars of cash for them (aside from legal and due diligence fees).
That helped us get closer to consolidated profit without deploying a lot of cash, and frankly I wish we’d used the more creative financing options sooner.
Operationally, the portfolio has grown to roughly $575K operating profit per quarter as of Q3 2025.
Meanwhile, we’ve cut parent company overhead by about 35% since our IPO. We’ve got better at operating in a more lean fashion but also have a better understanding of what it takes to be a public company and what expenses are and aren’t needed.
Plus, AI has reduced a lot of our expenses and increased our output.
The other big shift is philosophical. When we started, we were acquiring across a wider range of online businesses. We’ve narrowed the focus to digital agencies and online education platforms where we can build operational synergies across the portfolio.
Can you provide a brief overview of the current businesses inside the Onfolio portfolio?
How have these businesses been performing, have you managed to grow them since acquisition?
The portfolio breaks into two segments.
On the B2C side, Proofread Anywhere is our largest business. It’s an online education business that teaches professional proofreading. We acquired it for about $4.5M at a 3.75x multiple, and it was already generating around $1.2M in annual free cash flow at the time.
Many people thought AI would kill this business, and I can see why one would think that from the outside, but the reality is professional proofreaders are in more demand than ever, and professional proofreaders are typically doing more technical proofreading than simple stuff you can ask ChatGPT about.
That said, we’re expanding the platform beyond proofreading into broader freelancer education, covering general freelancing skills and business fundamentals for people building independent careers. We’re pretty excited about being able to teach people how to really use AI for marketing, among other things. There’s a lot of room for expansion.
On the B2B side, we have a group of digital agencies that increasingly work together. Eastern Standard is a web development, branding, and design agency. RevenueZen handles SEO and content marketing.
Contentellect, DDSRank, and SEOButler are more like productized services and have admittedly gone through some rough patches over the last few years, especially in a post-LLM world. Making them run leaner and adding them as divisions of Revenuezen and EasternStandard has allowed us to keep them alive and profitable though.
We’ve spent the last few months beginning to merge the agencies into a larger centralized organization, which should result in some gains from productivity, reductions in expenses, and better focus.
In terms of growth, it’s a much more mixed picture and frankly, somewhere we have underperformed.
Organic growth is difficult when you’re taking over small businesses and don’t have a lot of funds to use to grow them.
The reality is that one of the biggest reasons that these businesses trade for 3-4x is the difficulty acquiring them and keeping them afloat afterwards.
Generally if a business performs stably after acquisition then that is a win, even though that is not a particularly exciting story.
That said, if you can do that then you should get above average returns and can compound well.
Partly due to the parent company overheads and partly due to us needing to get better over time, we haven’t yet hit that compounding flywheel, and I would say most of our acquisitions have either underperformed expectations, or have remained flat.
I think we have a lot of room to improve here, and we are getting a lot better, so I’m optimistic. Plus, the prices we pay does give us room to underperform and still get decent returns. We’re still in double figures.
When can we expect Onfolio to be profitable at the parent level?
We really just need to keep doing what we’ve been doing.
I haven’t spoken much about our overall progress with acquisitions so far, but it’s the area I’m most proud of.
We’ve roughly 10xd the portfolio profit since we IPO’d and that’s been entirely down to acquisitions.
Doing a few more will get us to the point where we’re self funding. Portfolio cashflow is almost at the level where it can support parent company expenses.
The convertible note deal we entered into in November gave us capital that would extend our runway, allow us to grow our existing portfolio, and it gave us a mechanism to bring in additional capital for acquisitions.
When you look at our filed financials, it can be hard to see through the noise. For an acquisitive holding company, GAAP net income is noisy. Amortization of intangible assets from acquisitions, stock-based compensation, and one-time costs like audit fees all hit the income statement but don’t reflect the actual cash dynamics of the business.
I’m not trying to explain away our losses here or create a kind of “Adjusted ebitda” where the numbers magically work, but there’s definitely better ways of tracking progress.
What we track internally, and what I’d encourage investors to watch, is the relationship between two numbers: cash distributed from the portfolio companies up to the parent, and the parent company’s cash expenses.
The amount of cash the portfolio distributes to the parent company has been consistently trending up.
Parent company expenses have come down from about $900K per quarter to roughly $550K. The catch is that interest payments on acquisition-related notes and preferred shares have grown from near zero to about $200K per quarter, which offsets some of those operational savings.
The gap between distributions and burn has been closing steadily though. It doesn’t always go in a straight line, but we’re getting there.
What closes the gap? Two things. The interest costs are mostly temporary. Those notes amortize over time, and we recently cleared over $1M in liabilities, which saves roughly $150K per year going forward.
The other thing is simply growing bottom-line through more acquisitions and where we can find it, organic growth.
I’m not going to put a specific quarter on it because I don’t want to set an artificial target. But the trajectory is clear, and the data is public in our quarterly filings. I encourage anyone interested to look at the trend over the last ten quarters rather than any single snapshot.
Side note: I wrote up an article that goes into more depth about all of this at onfolio.com/path-to-profit
AI has lowered the ease and cost of creating content, building apps etc. Does the thesis of buying a small digital business still make sense?
And what impact has AI had on the Onfolio businesses?
AI has absolutely changed the landscape, and I’d be dishonest if I said otherwise. But it’s changed it in ways that are more nuanced than the headline narrative.
For content-dependent businesses, the old model of paying freelancers to produce generic articles at scale is dead. AI can do that faster and cheaper. If that was the entire value proposition of a business, the business is in trouble. Fortunately we pivoted away from content sites in 2021.
It definitely hurt Contentellect as people just don’t need to hire content agencies anymore, but the thesis of buying small digital businesses is generally still intact.
If anything, AI gives us more opportunity:
Here’s what AI hasn’t replaced: relationships, domain expertise, and the ability to solve specific problems for specific customers. Our other agencies don’t sell content. They sell outcomes for their clients. SEO rankings, qualified leads, web presence that converts.
AI has made the delivery of those outcomes more efficient, which actually improves our margins. Our teams use AI tools daily and it’s made them more productive.
We can also build more customized reporting and deliverables now as it just costs basically zero to create, and it gets better results.
There is also an interesting arbitrage opportunity for a few years where we can buy businesses that aren’t utilizing AI enough and improve their margins. I’ve been waiting for this opportunity since 2022 and with the explosion of capabilities thanks to Claude Code, it’s finally here.
As mentioned earlier, for Proofread Anywhere, AI is interesting because it could be seen as a threat to the proofreading profession. But what we’ve found is that demand for human proofreading hasn’t dropped. If anything, the volume of content being produced has increased, and with it the need for quality control. The business continues to perform well.
The thesis of buying small digital businesses absolutely still makes sense. But the types of businesses worth buying have shifted. We focus on service businesses with client relationships, recurring revenue, and operational moats.
Those characteristics are actually more valuable now that the purely automated content play has been commoditized.
Are you still seeing plenty of deal flow? And what type of multiples are sellers asking for?
Are content sites, agencies, and apps getting lower multiples than they once did?
Deal flow has been steady. We review a significant number of opportunities and pass on the vast majority.
We’re trying to be more and more disciplined about what fits the portfolio, and our minimum threshold is typically around $500K in annual profit, though we’ll go smaller for strategic tuck-in acquisitions that expand an existing portfolio company.
Multiples have come down meaningfully for these businesses. Two or three years ago, a business would sell for at least 4x and it also wouldn’t stay on the market for very long. Today, many of those businesses are struggling to find buyers at any price because the traffic model has shifted so dramatically. Brokers are seeing longer listing times and higher fail rates for content-dependent businesses.
Agencies are a different story. Well-run agencies with recurring retainer revenue, diversified client bases, and teams that operate without the founder are still commanding 3-4x SDE. The market has gotten better at distinguishing between a “job disguised as a business” (owner does everything, project-based revenue, concentrated clients) and an actual transferable business. The gap between those two categories in terms of valuation has widened.
SaaS and app businesses continue to command higher multiples, but there’s more variance now. A SaaS product with real retention and growing MRR still sells well. But there are a lot of small software products that were built on assumptions about distribution or monetization that haven’t held up. People are nervous about how AI will impact software and the Saas model in general, and that is showing up in multiples. It could be a great opportunity, frankly.
You recently created a Digital Asset Treasury which currently holds Bitcoin, Ethereum, and Solana. What was the thesis for creating a DAT?
I want to be direct about this because I know the term “Digital Asset Treasury” triggers a pattern-matching response for a lot of micro-cap investors, and that skepticism is justified. There are companies out there that have announced Digital asset treasury strategies as a way to generate headlines and pump their stock, or even as bail-outs. That’s not what this is.
The thesis is straightforward. We had access to a $6M convertible note facility. A portion of that needed to be deployed into digital assets, primarily Bitcoin, Ethereum, and Solana. The remainder is available for working capital, growth initiatives, and debt repayment. It was really a balance-sheet decision.
The arrangement allowed us to raise the capital we needed to extend our runway, deploy capital on growth, and provide (eventual) upside through the appreciation of those assets.
The yield component is the practical part. Ethereum and Solana staking generate ongoing returns without active management. Essentially the returns are similar to treasuries, as Eth generates about 2% and Solana is north of 6%.
The important context is that our core business is acquiring and operating digital businesses at 3-4x multiples. That hasn’t changed. The digital asset position is a treasury management decision, not a pivot in strategy. If someone looks at our portfolio P&L, our agency operations, our path-to-profitability data, and concludes that we’re a crypto play, they haven’t looked closely enough.
Are there other cryptocurrencies, blockchains, or crypto projects that interest you?
We’re mostly focused on the more “bluechip” cryptocurrencies. In our next round of allocations, I will consider Hyperliquid, as it has really been the stand-out performer in the space, but otherwise I’ll keep to the 3 we already have.
We are not actively studying and investing in the cryptocurrency space as our main focus. Right now, the best use of our resources is growing the operating portfolio.
I know many people whose original focus was acquiring small private businesses but eventually transitioned to investing in public companies.
Have you entertained the idea of investing in common securities for Onfolio? This could provide diversification, income, and perhaps even act as a hedge if you were to invest in non-digital companies.
It’s an interesting question but it’s not something we’re pursuing right now. Our advantage is operational.
I’m repeating myself somewhat, but we buy businesses at 3-4x cash flow and then improve them through operational integration, shared services, and portfolio synergies. That’s a fundamentally different activity from buying public equities, which is a capital allocation and market-timing exercise.
I agree with you 100% that it provides diversification, income, and hedging, but I don’t think we a.) have the capital spare to need to invest in equities, and b.) have earned the right to do so yet.
We do have some unfair advantage right now in that we can probably identify companies caught up in the Saaspocalypse that don’t deserve to have been, and in another world that would give us the opportunity to create alpha, but as we are focused on what we are focused on right now, it seems like a distraction beyond anything else. Some day though.
For now though, when we acquire a business, we can influence the outcome. We can improve margins, integrate operations, build referral loops between portfolio companies, and grow revenue through active management. That’s where the returns come from.
I’d also note that our investors chose Onfolio because they wanted exposure to private digital business acquisitions.
What can we expect from Onfolio in 2026?
The focus for 2026 is clear: close the gap between portfolio distributions and parent company expenses, and restart acquisitions.
On the profitability side, the portfolio is already generating meaningful cash flow. Parent overhead is at its lowest level since we went public. The interest costs from acquisition financing are amortizing down. The convergence is happening and we expect to continue making progress on that front.
On acquisitions, our model is refined and our deal flow is active. We’re focused on digital agencies and online education businesses where we can create value through integration with the existing portfolio.
The tuck-in model, where we acquire smaller businesses that expand the capabilities or reach of existing portfolio companies, is something we’re particularly interested in. These deals are often smaller but the returns are outsized because the operational synergies are immediate.
We’re also investing in visibility. I’m doing more content, more interviews, and being more transparent about the operating data than we have been historically. Part of the challenge for any micro-cap is simply being discovered. We have a good story and good numbers, and more people need to hear about it.
The portfolio companies themselves continue to develop. Proofread Anywhere’s expansion into broader freelancer education is underway. The agency cross-referral network is maturing. We’re building the foundation for something that should compound nicely once the profitability milestone is cleared.
If I had to summarize I would say “More of the same, but with clearer focus and better execution.”
Thanks Dom.
Readers can visit onfolio.com for more information.
You can also follow Dom on X @DomWellsOnfolio
Thanks for reading. @capitalemployed on X