discuss Money or stake in the company - For your domain name?

[Arpit131]

I was wondering what would be a better option when selling your domain name to a startup that wants it desperately and is ready to pay like $10,000+.

What is the better option to go for - Take the cash and make the sale OR take some cash and some stake(which is a difficult deal to get) or take a stake in the company?

The point is, since the startup is ready to scale up to a new name and willing to pay that amount, it would be funded and might be having huge scope.

We already know the case of Uber.com, where the owner gave the domain name to the new owner for a stake in the company and minted good money off the deal.

 

[aramyus]

Domaining and high risk investment are two different businesses, so getting the cash is the normal option.

Now, if your domaining business is florishing, you don't need the $10k to continue to run it, it becomes YOUR money and you can make a high risk investment with it. In that later case, tax considerations may be the most important factor in your decision.

 

[pfj]

We already know the case of Uber.com, where the owner gave the domain name to the new owner for a stake in the company and minted good money off the deal.

Well yes, to a certain extent. Though the uber domain name was owned by Universal Music as a result of a substantial ($7m+) investment they made in an earlier company which went nowhere. They gave the domain name to Uber in exchange for 2% of the company - but apparently cashed out early, selling the stock back to Uber for around $1m. If they'd held onto it, their stake would now be worth $1bn+

Which, really, makes the argument very well - are you experienced enough in the industry in question to determine when to hold and when to sell? Would you benefit more from $10k now, or the small possibility of $1m in three years?

 

[baseballworld]

I prefer the money up front.

 

[LaunchUp.com]

Great thread!

This has been on my mind lately among other things, as I look to evolve my business from simply just buying and selling names, though this is the core. After my first 5 figure sale, and seeing the name in good use, I started to think more on this.

Thanks for the Uber example. It seems risky, but you wont get big rewards without taking big risk.
I think it's a great idea, but it all depends on your current financial predicament, how big your balls are, and the company buying the name. If you know the name is solid, and do good research and believe in what the buyer/company is doing then go for it.

I think the domain business will evolve but only a few will have what it takes it grow with it.

My question is: If you take that risk, and ask for a stake in a company and they agree, how do you work that out? I mean, do you need a lawyer to send official documents, signatures etc... ?

Just so someone doesn't take your name for free or for a tiny fraction of the cost.