NamesCon2020

Domain name Opportunity Fund

Labeled as finance in Creative: Finance, Lease, Trade started by Rob Monster, Sep 19, 2019.

Replies:
14
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1,020

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Is the domain industry read for managed hedge fund models?

  1. Yup, it is way past time

    28.6%
  2. Yup, but it will be a slow journey

    14.3%
  3. Maybe some day but not yet

    23.8%
  4. Nope, that dog won't ever hunt!

    33.3%
Total: 21 vote(s)
  1. Rob Monster

    Rob Monster CEO, Epik Epik.com Staff PRO Gold Account VIP

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    Our young dropcatching champion @Gube and @RaquelPenha have been brainstorming an idea in response to some discussions on Telegram. The idea is not a new one, but the execution of it is probably something to work through.

    The idea is out of the hedge fund world, and the structure is like a limited partnership. An entity with an Epik account buys domains, monetizes them and sells them or leases them. When it has more cash than opportunities, it distributes excess cash.

    Investment thesis:


    - .COM market has won. All roads are going back to .COM as ccTLDs and gTLDs bow down to .COM.

    - There is an asymmetric market opportunity as rich get richer and poor get more desperate.

    - Domains are being dropped and liquidated as traditional PPC lander economic model is failing to cover renewal fees. Most investors have not switched to landers or leasing.


    Investment criteria:

    - Maximum 12 characters
    - 1-2 words in English or major foreign languages
    - Favorable SEO value or brandability
    - High quality hyphen .com acceptable
    - IDN acceptable for exceptional opportunity


    Investment funding source:

    - Cash/Wire
    - BTC or approved crypto
    - Approved domains bought at opportunistic valuations


    Fund Managers:

    - To be appointed but initially @Gube and @RaquelPenha supervised by @Rob Monster.


    Governance and Audit:


    - To be announced but will be transparent through non-fungible ledger, possibly a private Blockchain visible to LP members only through private key.


    If interested in it, PM to @Gube or @RaquelPenha. I think I am going in for $10,000 for this managed fund because I believe in these folks. If more folks want in, we'll formalize it with some governing terms of service and daily performance reporting.

    Disclaimer: This is not an offering to sell securities. This is a theoretical outline of a future concept that could be introduced if there was market demand subject to appropriate legal review.
     
    The views expressed on this page by users and staff are their own, not those of NamePros.
  2. Ategy.com

    Ategy.com NameCult.com Gold Account VIP

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    This is an idea I think a lot of people have thought about. Originally I think more to compliment each other's strengths and weaknesses.

    With the depth at which i manually go through the expiration auction lists each night, there few better positioned to make really smart value acquisitions than I am. But conversely, I haven't had time to be organised with my portfolio after acquisitions. That being said .. lol ... that's the actual proof I need to myself of my acquisitions being so good, that 2019 is already a profitable year for me despite most of my domains not being priced or even listed on most platforms. I'm probably running at about 20% visibility at the most maybe even less now that I think about it. Kinda thought about the possibility of finding a partner good at the rest, but in the end it's a really difficult think to find someone who brings equal value to the table (I obviously don't want someone who would bring less, but I'd be equally uncomfortable partnering with someone who brings more to the table).

    Domaining while having a full time job doesn't help and a bunch of other life-stuffs (flood, insurance/condo battles, walking Steamie, dealing with my knees,etc ). That being said my ever worsening knees are telling me it's time to leave my long time non-domain related job .. which in turn would bring me more than enough time to get organised (priced and listed everywhere).

    Or maybe I just need to stop wasting time with sharing the daily lists for everyone on NameCult and here at NamePros .. lol .. that's probably the first thing I really need to stop! Maybe I could sell my daily lists to a new domain mutual fund ;) .. or maybe to HugeDomains .. I wonder how much the fact I share most of my daily lists actually cost them each day?! lol


    As for this particular fund, I think the most important thing would be to see the quality/pricing of acquisitions. what sort of portfolios/experience do @Gube and @RaquelPenha have? Because in the end, ultimately, that question is more important than anything else, including the actual details of the concept itself.


    There's an old Domain Sherpa episode with @Ali Zandi talking about his former private fund. But that was mainly focused on premium one-word .com domains, and an initial investment significantly higher.
     
    Last edited: Sep 19, 2019
  3. Kassey Lee

    Kassey Lee 域名世界 VIP

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    It's inevitable that one day blue chip investment in domains requires so much capital that the ordinary investors cannot afford and they put their money in domain funds. I think it will work if you invest in solid domains such as 1-word, 2-word, 2L and 3L quality domains at bargain prices and set up the fund as a closed fund say 5 years. The fund manager must be a highly experienced domain picker.
     
  4. Larion

    Larion Established Member

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    what is your profit-share percentage ?
     
  5. eternaldomains

    eternaldomains Established Member

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  6. lovedomains.com

    lovedomains.com marketingstrategies.com Gold Account VIP

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    It's like fitting a shoe for donkey
     
  7. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent Gold Account VIP Trusted Blogger

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    I voted no, partly mainly because I am not at the stage in life to put retirement funds into this type of investment. However even if I was going to invest in a fund of domain holdings I do not fully buy any of the three elements of the thesis so would not invest in this one.

    I agree that monetized parking is near dead, but I am not convinced that most have not already switched to landers.

    I am not convinced that .com is the only road forward. It seems to me that .de, .co, .ai, .me have all had a strong year so far (and others), and .org is at least holding its own vis a vis .com. The new gTLD are looking to be down this year compared to last, but last was the strongest year they have yet had. I think the death of everything but .com overstates reality.

    I think the association of .com with the US Commerce Department, and the current climate of isolationism and trade wars, is the most significant risk to .com, hopefully a low one. Should the Google co-founder prediction of a bifurcation of the Internet ever occur, it is not clear what the impact of that would be on TLDs.

    It may be that we are on a route to even more complete .com domination, but I think a fund that assumes that with no diversification is unnecessarily increasing risk.

    I do think, at some point, someone, will initiate some sort of fund of domain assets. In fact one of my early questions on NamePros when I joined was if such a thing existed.

    I think that generally accepted valuations are the biggest roadblock to any such fund. At some level there needs to be agreement on the holdings worth at any time, and that is difficult to find agreement on.

    IF I was going to invest in such a fund my preference would be a more open one along possibly a mutual fund model. I am not under-estimating the various regulatory roadblocks. It would have to have a published statement re objectives, report daily on some valuation model and quarterly in some kind of independently audited way. Clearly the managers are an important key to acceptance and success.

    IF I was going to invest in such a fund I would prefer a fund that was diversified representing the current sales volumes. It would have a defined ratio of liquid, less liquid and speculative assets. It might hold both domains for sale and those leased or rented. That is .com would have a big role but not the only role. It would also diversify in a defined way numbers/short letters/brandable/two word etc.

    Someone will do this sometime. I would not invest in the model described personally, but wish you well if you go forward.

    Bob
     
  8. bmugford

    bmugford www.DataCube.com PRO ICA Member VIP ★★★★★★★★★★

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    This has been tried many times in the past.
    There are so many potential issues it is hard to envision it working well.

    Brad
     
  9. Internet.Domains

    Internet.Domains Top Member VIP

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    The largest issue to tackle with this idea is liquidity. To solve that problem the fund should be tokenized on a blockchain (ethereum). The tokens could be traded and/or liquidated at any time. As the fund grows, so do the value of the tokens.

    Again, liquidity is the largest barrier and by tokenizing the assets, the problem is solved.
     
  10. Rob Monster

    Rob Monster CEO, Epik Epik.com Staff PRO Gold Account VIP

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    Yes, that is fine. I am giving them a $10,000 kick-start for the fund while we develop the platform for allowing anyone to set up a managed domain fund with configurable settings unique to their fund.
     
  11. Rob Monster

    Rob Monster CEO, Epik Epik.com Staff PRO Gold Account VIP

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    There is no profit share -- it is just pro rata distribution of cash / proceeds. If a domain is sold through Epik marketplace or Epik escrow, the fund will just pay the same rates that NamePros people pay to cover payment processing and allowance for doubtful accounts, i.e. fraud risk. I will be teaching Gube and Raquel how to buy low and sell high and if it works, the concept can be taught to others and replicated, around themes, e.g. country-specific ccTLD funds, etc. The fund parameters I described is just the most obvious one to start with in order to work out the processes for transparent stakeholder management. They seemed excited to work on it and I agree the idea has merit.
     
  12. Ategy.com

    Ategy.com NameCult.com Gold Account VIP

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    In all honesty .. I do like this idea in theory *IF* it is done properly.

    I think the biggest obstacle however is the limitation to the Epik platform.

    Don't get me wrong, the platform itself is great, I have never had any issues with customer service. Add to that you keep adding more services via smart and well integrated acquisitions ...

    However .. the ultimate roadblock for most is aftermarket. You have 40-100 domains flowing through your expiration platform each day, while GoDaddy literally has 1000 times that amount. As much as many of us love and support your platform, the aftermarket is where most of us thrive in getting great domains at vastly undervalued pricing.

    MASSIVE kudos to you for being smart enough to partially make up for that with $8.49 drop-catching. Because of the traditional $25-69+ priced drop-catching, I've never really bothering drop-catching because at that price point it always made more sense in terms of quality/value/time to go with GoDaddy Auctions.

    My process is fairly extensive, but there's no reason (aside from TIME) I couldn't also apply it to drops. At $8.49 (if that does that include the registration for 1 year), then the numbers change significantly and it's something I'll be looking into (when I actually have more than a minute .. lol), but it still doesn't change the fact that there is huge opportunity for great acquisitions outside of the Epik platform ...

    If there truly was a registrar agnostic system in place (or at least covering the biggest aftermarkets), then this could be very interesting.


    But then you also have a 2nd hurdle. Because while it's great that you start one fund with no extra fund-specific fees, ultimately if you want quality fund managers, they will need a reason to start a fund. Fund managers need to be paid. Either via monthly payments, or via a default percentage of the fund.

    It could even be set up in a way while the fund is registrar agnostic for initial acquisitions, that any renewals be transferred to Epik. I suppose that's where there could be some value to Epik and a potential reason for Epik to subsidise/pay managers (because eventually Epik will make 9% if the domain is sold on their platform, or pocket the potential $9+ closeout money if the manager allows any domains to expire.


    There are so many specifics and details that would need to be clarified and spelled out before I'd ever say this is a good or bad thing either way ... but for the moment I'll say it's very interesting .. and as someone who actually lets many quality domains pass me by every day, it definitely is something I'd look into. That being said .. I'm in a pretty unique situation given that I'm probably the most thorough and deepest manual/analogue aftermarket miner on the planet .. so my investment in time pays off in terms of finding the rare occasional gems that most or all others miss .. it's how I've been able to be profitable despite being organised in any way (most of my domains aren't even priced or listed) .. lol.

    Do keep us up to date .. and do let me know when you'll be looking to beta .. *IF* it's done right, then I'd be interested. Pretty big *IF* though .. there are a lot of potential pitfalls and obstacles on your path to getting it just right!
     
  13. Kassey Lee

    Kassey Lee 域名世界 VIP

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    Very much agreed. It's approx. $20 (after paying to get into the Domain Discount Club) to pick up a Closeout domain at Godaddy but it offers thousands of domains to choose everyday.
     
  14. bidigitals

    bidigitals Restricted Blue Account

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    Just wanted to thank you for such a developed and articulate view. Very informative, & appreciated; certainly thought-provoking. Cheers.
     
  15. NameJi

    NameJi The Domain Lover Gold Account

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    I said Yes. A few years ago we acquired a 5 figure domain from a company that is actually a hedge fund for domain names.

    If Epik is interested, it is good time to go!
     

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