The Harbor City Capital Management fund boasts returns of 60% in its first year, and is currently delivering 5% monthly returns to investors by tapping niches in the $131 billion online advertising market.
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So, how does it do it?
Basically, Harbor City is making what it calls a digital marketing arbitrage on this booming marketplace. It's betting that it can sniff out online leads and generate sales for businesses at a cheaper cost than the businesses are willing to pay for those leads. In other words, the spread - or difference - between the sale price per lead and the actual cost of capturing that lead could generate hefty profits for the company - and investors in the fund.
So far, it seems to be working.
JP Maroney, the brains behind the concept, is an entrepreneur and investor with more than 25 years of experience starting, buying and selling companies. His business chops come from years of working as a consultant, business growth strategist and client acquisition consultant for such firms as Wells Fargo, Metric Property Management (a unit of BlackRock Realty Advisors,) Precision AutoTune and other corporations.
Since 2004, he's focused on online advertising and marketing. "We would put in a dollar on advertising, and in a short period - three or four days - we'd get back [a] $1.50, $3 and sometimes $5 return on our money," he said.
As he watched money flood into the digital advertising world, Maroney had an "a-ha" moment: He wondered if he could use his business and digital marketing expertise to raise a fund that could invest in this sector.
"This is a $131 billion a year industry, and over 60% of the dollars being spent on online advertising right now are being spent on performance marketing," where the ads don't just advertise a brand - they actually target specific customers, who will click on the ad and buy a product, said Maroney, Harbor City's founder. "It's a big big business."
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