Home / Blogs

New TLDs: Preparing Your Funding Strategy and Approaching Investors

Sedari

Dirk Krischenowski's presentation gave us an excellent overview of this business as a stand-alone investment opportunity. How to built out the models to include all things investors would chose when taking an outside look at where to put their money in our industry. My little fingers ran furiously to try and capture as much of the presentation as possible — so this may be one of the choppier postings of the event. Potentially also among the most important. If we do not see adequate funding for the initiatives led by interested organizations and groups — this new Top-Level Domain (TLD) initiative will not reach it's full potential.

A few market cap valuations worth noting when setting the scene for potential investors:

  • Verisign values at close to 5 billion
  • Neustar just over a billion
  • Sedo at 90 million

The domain name industry has it's own capitalization systems and a few of it's own investment funds, a few of which:

  • TopLevel Domain Holdings - Fund
  • DDH - Fund

This industry has a small set of powerful players; specifically registries and registrars. It's very different from most other technology spaces: Past performance is not an indicator of future results. The New TLDs are expected to do better than the past. They will have usage, which is what the new TLDs lacked in the first rounds (which included .BIZ and .IFO). Names like .FACEBOOK, .GOOGLE, .EBAY will be visible and that will influence new TLD acceptance.

Considering the Secondary Market vs. new TLDs is something the investors will spend time on:

  • Second level Domains vs. Top level Domains
  • Should I invest in Insurance.Com or should I have .Insurance

Agreeing with many other fellow speakers, Dirk mentioned the biggest challenge is how to get to the registrars shelf space. However, this of course, applies primarily to the .GENERICS and in some cases .COMMUNITIES — less so for .BRANDS.

Additional challenges mentioned were the need to fight cyber squatting and domain grabbing in your new space, as well the ever-challenging task of acquiring experienced and talented manpower.

Factors to consider when Building Your Valuation and Investment Proposition:

For community TLDs:

  • Have an advisory board
  • Community leaders on your management board
  • Get community support from associations
  • Gov want to have opportunity to Observe, Object and Sink the business - whenever they want.

The minimum a business can expect to invest in a new TLD is $500,000.

Valuations in the past for new TLDs:

  • .NAME sold for $11,000,000
  • .MOBI sold for $8,000,000
  • Dot Eco sold 10% of their business for $200,000

Ways to Get Funding:

  • Try crowdsourcing - get all 3 million smiths in the us to give a small amount for .SMITH
  • Reach out to Government

Exit strategies:

  • Sell to registry operators
  • Sell to an industry player - .SHOP, .MOBI
  • Sell one registry to another registry

Cost of entry is fairly low - cost of failure is very high.

From the audience, I couldn't help but ask him a question:

Dirk, you quoted expected registrations for top generics such as .WEB at 5 million names in the first year. Where did you get those numbers? And, to you the expert panelists, do you believe those predictions?

I asked this because I was on the launch and marketing team for .BIZ — and it was uphill selling those names all the way. We would have been over the moon with 1 million names in the first year — it didn't happen for over 2.

Dirk's Answer: We asked the applicants what their estimations were, as well as supporting potential buyers of the names, such as .SHOP.

Dirk asked Jose Ignacio Rasco what were their key decision factors in choosing a TLD investment:

  • Is the team is credible — do they have experience in the registry business
  • Do they have (and fully understand) a clear and concise marketing and distribution plan

There is big money to earn in this opportunity… and to lose.

Written by Jennie-Marie Larsen, Chief Marketing Officer at Sedari

By Sedari, Registry Management Services. Sedari is a consulting and technology company focusing on TLD operations for applicants who want to run their own registry. Sedari guides new TLD applicants through the entire continuum of ICANN's application process and, most importantly, provides a robust fully outsourced Registry Services Management Platform to help string owners run their top-level domains over the long term.

Related topics: Domain Names, Registry Services, Top-Level Domains

WEEKLY WRAP — Get CircleID's Weekly Summary Report by Email:

Related Blogs

Related News

Topics

Industry Updates – Sponsored Posts

Public Interest Registry to Speak About Upcoming Launch of .ngo and .ong Domains for NPOs

Landrush Opens for .Website, .Press and .Host

Afilias Announces General Availability of .BLACK Top-Level Domain

Last Lap of .WEBSITE, .PRESS and .HOST Sunrise

DotConnectAfrica Trust Responds to ICANN 50 GAC Advice, Updates on .Africa Application IRP Status

New .ORGANIC Domain Sunrise Begins, Creating Verified Space 
for Organic Products and Services

Non-English "IDN Email" Addresses Are Finally Working!

TLD Registry to Speak at Inaugural World Domain Day India

Independent Endorsement of Dot Chinese Online & Dot Chinese Website

ICANN London Recap Webinar

Four Reasons to Move from .COM to Your .BRAND Domain

Neustar to Launch usTLD Stakeholder Council

Introducing the New .ORGANIC Domain: A Trusted, Credible Space for Organic Products on the Web

.WANG - 15,000 Registrations on Day One of General Availability

Dot Brand: Why Your Brand Needs Its Own Top-Level Domain

Afilias Announces Start of .BLACK Sunrise Period

Radix Launches Three New TLDs in Sunrise With Backing from 50+ Registrar Partners

.WANG General Availability Opens on June 30, 2014

Continuing to Work in the Public Interest

.Press Domain Names - The Changing Face of Journalism

Sponsored Topics