Fred Wilson a self described Venture Capitalist and principal of Union Square Ventures published a post on this blog, AVC.com the other day about “Finding and Buying A Domain Name”.
It’s an interesting take from a non-domainer perceptive.
Here are a few points he made I especially like:
“”
– Be prepared to pay up for a good domain. It is very unlikely that you’ll find a great domain name these days for less than $10k. And it could cost a lot more.
– Think about rent to own. If you find a great domain that you can’t afford but you absolutely love, you can often rent it for a few years with an option to buy it at any time. Let’s say you are launching a website to buy boats online and the person who owns boats.com wants $100k for it. There’s no way you can afford it right now. But the owner is willing to charge you $5k per year for it and will let you buy it anytime over the next three years for $100k. You do it because you figure that in three years, you’ll be selling 10s of millions of dollars of boats and your business will be worth 10s of millions and $100k will be easy to raise for not a lot of dilution. And if you don’t sell any boats online then you don’t need the domain and it didn’t cost you much.
– Think about offering equity instead of cash. Many owners of sought after domains have this idea that their domains are going to be worth millions some day. And who knows, they might be right. So it is hard to pry the domain out of their hands. The one thing you have that might be worth millions some day is the equity in your company. If you have a hot company (like foursquare was when it purchased foursquare.com), you might be able to trade some equity for the domain.”
All and all some excellent advice and you should check out the full post
very often a good domain name is the BEST START for a successful company
Hmmm… I wonder how much time he actually spends with domains?
The very first comment by “Guest” following Fred Wilson’s post is also a good read.
He should be preaching his choir to the small business association.
Yes please – I’ll have 1% equity of Facebook…
the author has succumbed to the domainer spin.
we have everyone under our spell. hehe.
vc: tell your clients to pay up for domains.
cost of doing business.
domainer market makers rejoice.
Good approach, but he should have choosen a more realistic example/pricing. Very doubtful, that you can rent a domain like boats.com for $5k a year. I am wondering how many offers the owner of boats.com will now get, wanting to rent it for $5K a year or possibly less.
Snick
Agreed a domain like boats.com is going to rent or lease for a much higher amount that $5K and would cost seven figures not $100K to buy, but I think he was just using it as a loose example
This is what we had at Brands-and-Jingles for two years: http://jing.ly/deal-structuring/