How to get funding for a domain purchase

[Fork]

Hopefully this is the right forum for this topic - I wasn't sure where to put it.

There's a domain name I'm interested in purchasing from it's current owner in the low to mid $xxx,xxx range. I plan on developing this domain into a business. It's currently the best possible domain for niche the business is in (think realestate.com for the real estate niche) and won't take long to reach #1 in Google for its main keyword.

With some rough calculations, I'm very confident the business will be profitable in a year, but more likely within 6 months. There are many ways of generating revenue with this domain in this niche, but the primary one is a product that I'll be developing with my business partner - a product that's pretty much done, just needs the pieces packaged together.

I've considered doing this project on a cheaper domain, possibly even a hand-registered one. But I'm afraid the value of the domain will be going up soon and will cost us more in the end - I also don't think our business plan will be nearly as successful with a sub-par domain in the niche.

Any ideas for getting funding for this domain investment?

 

[DomainTalker]

Building a business always entails risk....but, calculated risk. The key is an assessment of the market he is targetting.

I'd ask the OP whether he has really assessed his target market for his product/service? On what basis does he have confidence that he'll get a ROI? Is the assessment based on something solid?....Or, is it 'just an idea'?


If he's done his budgets - calculated the target market, and sees sufficient sales - and, he has solid reasons to see an acceptable ROI - then, the purchase of the domain becomes one of the budget items that he's planned for.

If, on the other hand, he's contemplating a large upfront (borrowed) investment - but, based on a 'hunch'....Well....I'd think very hard about starting out in serious debt...

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[dbtbandit67]

there is a big red line between a domainer and an end-user and a problem domainers have is justifying large purchases on the grounds that their genuine end-users when their not (ex/ business.com).

judging from the OP i dont believe that he's an actual end user as he is trying to develop a domain for the sake of development. there is a difference. the guys that started ebay and google didn't do it cause they felt like they had great domains, there was a genuine passion about those business models that could have been completely independent from the domain.

100K+ is a lot of money to borrow over a domain that you'd be forcing yourself to develop.

 

[DomainTalker]

there is a big red line between a domainer and an end-user and a problem domainers have is justifying large purchases on the grounds that their genuine end-users when their not (ex/ business.com).

Yes, I agree....For 'end user', read real 'businessman/woman'....Domaining is a business, of course, but, very different from building a sustainable business brand in the competitive marketplace, and growing market share in the target market segment.

With a good business head, the right product, and, some capital to promote the business, it can be done, of course. But, the less real business experience you've had, the higher the risk if your start-up costs (domain purchase cost, marketing/promotion costs) is high

the guys that started ebay and google didn't do it cause they felt like they had great domains

These guys had a business model grounded in established practice.

In the case of ebay, auctions had proven sustainable in the real world for hundreds of years....They simply adapted the auction model to an online format, promoted it, and nailed the segment. They were early in on that - and did very well.

As for Google, Search Engines were already a proven online business model. These guys found a better way to make the mousetrap....But, their start up costs were a cheap domain + their own coding skills/time + marketing skills etc...Minimal risk, really...Only later - as they grew so fast 'cos their model was good - did they need outside capital to manage that growth, but, by then the thing had shown real promise...


The YouTube founders had a new, unproven, business model/idea...But, their start up costs were, again, a cheap domain + their own coding skills/time + whatever marketing they could learn about etc....Minimal costs...So, starting out, these guys had minimal risk, but, lots of upside if it took off, as it did.

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[blaknite]

Unless the business model hinges upon the natural traffic of the $xxx,xxx domain you are better off not buying the domain. The reasoning is simple, but you will need to think a bit to understand it.

If you've got a mortgage payment take a quick look at how much goes to interest and how much goes to principal. Your bank probably tries to hide it in the fine print, but you just might be surprised when you read the numbers. From my most recent statement: Interest 395.32, Principal 92.71. That means I pay four times more than I need to because I borrowed the money instead of paying cash.

In the case of your domain business if you can do the "business" part without the domain your chances of success go up by at least 5x. However if your business requires the natural traffic of the domain to be a success or the domain has enough natural traffic to guarantee your success then its a crucial part of your business plan and a must buy.

I don't know where you will get that kind of money so I can't answer your original question, but I can offer a bit of information as advice. I've spent sums ranging between 1k and 15k on various domains that I still believe were good purchases. However none of them make me as much money as the two best earning domains I have. I payed reg-fee for both and neither gets any natural traffic. The business idea makes the money, not the name. Just pick a name that will do for now and if your business model is truly sound, you should be able to buy that perfect name in no time.

 

[platey]

great thread and sound advice

are any of you on this thread still on here?

its only 7 years later than the thread lol

 

[mad409]

A domainer should never get funding for a domain, don't see why any upstart, or reputable business would do it either. BJMO..

Payment plans is a different story..

 

[platey]

good advice

you are right

its good to hear good old fashioned common sense