Domain for 50% of profits

[H-O-V]

My business partner and I are creating a site similar to iwebtools.com, we have created most of the scripts, like

Website Thumbnails
PageRank checker
Alexa Rank checker
Speed checker
Age checker
DMOZ checker
Whois info
^ All the above bundled into one site analysis checker ^

Ajax instant domain availability checker - like PCNAMES.com

Text encryption (Ajax)

There are a lot more in the process of completion and we hope to launch in the coming month.

Our problem lies where the domain is concerned. We have found a one word domain (dictionary word) that is brandable and suits the site perfectly but we are in the process of aquiring/inquiring about the domain...

We are not yet sure how much the domain is going to cost, but we are sure that is going to be quite a lot of money. We are looking for someone willing to lend us the money to purchase the domain in exchange for 50% of the profits made until we buy you out (for the price you lent us for the domain). Please do not send PMs inquiring about the domain name, we will only discuss this with potential investors. It would be nice to arrange an IM conversation rather than contact via e-mail/PM. Please PM me if you are interested.

Thanks,

Mutasim

 

[SharonTucci]

A few random comments..... you said "a lot of money" - I think to get serious interest, you'd need to be more specific as well as be prepared to say why getting a domain for reg fee (or something less expensive than "a lot of money" is warranted. I'm not sure what the financial incentive is here - you said that you'd split the profits 50/50 until you buy the person out for the amount they invested. Where is their financial gain if all they get is their original investment? Finally, if it IS a sizable amount of money you are looking at, then be prepared to explain more on the 50% of profits along with your ideas for marketing.

Personally, if this is a project that has good potential profit, I'd package it to look for an investor on an ongoing basis rather than a loan to buy a specific domain.

 

[jay28]

Sharon brings up some good points,

 

[H-O-V]

We are still not aware of the cost of the domain...

We do not think that hosting costs will need to be funded for... just the domain (which will cost alot!)

and more questions ?

 

[RegisterRants]

The way that you phrase this...you are not paying interest. You are simply giving your investor 50% of profits until you have repaid 100% of your loan, and no more.

Am I interpreting this correctly?

 

[H-O-V]

The way that you phrase this...you are not paying interest. You are simply giving your investor 50% of profits until you have repaid 100% of your loan, and no more.

Am I interpreting this correctly?

That was the proposed deal, but this could stretch to 75% or more upon discussion with the investor.

 

[bocanames]

Mutasim,
Agree with Sharon on many points. Most importantly from my perspective, if you're offering 50% split of profits, offer some details of your business model. How will your site make those profits to be split?

 

[Skinny]

I think you should also set up a contract.

Skinny

 

[GiddyUp]

Check out Lease This

If you find a name you like, you may lease it. If and when your business generates enough profits on its own, you may buy out the name.

 

[SharonTucci]

That was the proposed deal, but this could stretch to 75% or more upon discussion with the investor.

You're missing the point - you said the % would be paid to the person UNTIL their investment was paid back. But what is their financial RETURN? Regardless of the percentage paid to the person, they won't do it out of the kindness of their heart.

Agreed on what a PP said about needing to share an actual business plan.. but most important of all is that this is all moot without sharing ballpark number of domain costs and area that it is in.

If it IS such a good plan, then I don't understand why you wouldn't just get a lesser domain now, get the cash flow going yourself and then buy the domain you want when you have the money available. Use permanent redirects on the old domain at that point.

 

[Robert Allen]

Hi,

I have been chating to you on MSN for along time, and i think you are a really good guy, but i think you need to give something back to the investers. Sharon knows business as i can tell. WHat you do is give the investers 75% back until you have paid back, for example, 120%. That way, the investor in the end profits and can reinvest in bigger projects for more money and so on..

ROb

 

[H-O-V]

So from what I gather are you guys saying 50% of profits till the buy-out is not enough?

 

[bocanames]

What exactly ARE you offering?

No, I think the message is to be clear with the incentives - vagueness is your enemy here.

If you're trying to borrow 3 months' revenues and offering 50% of those revenues for 6 months - well as Sharon says, where is the profit motive?? If you're trying to offer, say, 120% of the investment back, as Robert says, then be clear about it. Maybe you're trying to offer something else?

If you're testing the waters to see what kind of deal you can put together, then offer some details that can be used to make deals. How much is the name? How does, or will your company make money? And how much money? And which terms are you flexible on: that killer domain? payback terms? partnership arrangement? Something else?

 

[SharonTucci]

Mutasim, Sorry if my words seemed harsh - I think the problem might be you aren't making things clear to the rest of us. Do you mean to say that you are offering 50% of profits and then ON TOP of that you will pay back the original investment?

I guess the issue here is that there are certain ways that investments are done in ventures and this isn't one of them. Investors, myself included, don't bite on deals without either an equity stake OR a set return on their investment - along with a solid business plan. You also still haven't mentioned the ballpark range for the domain. If we're talking low X,XXX or less, then things can be a little simpler than this. But anything over that and you will need to be more concrete in terms of the different things I and others have pointed out here.

 

[H-O-V]

Thanks for your comments....

What I was intending was you would receive 50% of profits UNTIL the money was repaid. We are still trying to get in touch with the domain owner (we have their details from WHOIS, but they are not responding to the e-mail we sent). The other alternative would be a silent partnership, whereby the investor would pay the domain cost and receive an equity stake in the business.

We can show demos of these scripts that we intend to use on our site to potential investors.

BTW: We still do not know how much this domain will cost (any advice on aquiring the domain would be appreciated)

Thanks,

Mutasim

 

[vslevin]

Thanks for your comments....

What I was intending was you would receive 50% of profits UNTIL the money was repaid.

Under that, where would the benefit be for the investor? That is what everybody is trying to ask you, and I haven't seen a clear answer.

 

[H-O-V]

ok, the original idea was that the investor was to get 50% of the profits made until he / she was paid back the original sum (they would keep the 50% profits made). But this seems too little for some, so a silent partnership is probably the best solution with the domain being owned by the company but the investor having a % in the company.

If anyone is interested please do ask for a demo and we can try and show you what script we have already written. We do not want to publicly announce the domain we are trying to acquire yet as we have not yet had a reply from the domain owner, but from our own analysis/appraisal we would say that the domain in question would be worth $1000+, as I have asked previously, does anyone know of a successful way of acquire such an expensive domain?

- Mutasim