Startup just funded with $3 million wants my 5 letter dot com

[hookbox]

Hi Namepros,

I received an email today about a 5 letter dot com that I have. It's not a real word but a brandable 5 letter and it's only a few years old. The company yesterday registered the .co, .net, and .org of the same name. I was able to find out that the email I received is from the IP lawyer for the company that wants the name.

The company is in the Genetics/Biotechnology field and received seed funding of $2 million one year ago and a Series A round of $2.9 million about 1 month ago.

I think the name can easily sell in the low-mid $XX,XXX range to this company. I would normally throw out a good number and see if it sticks but I do believe this can be one of those "special sales" that I could leave a lot of money on the table. I would like to seek others opinions first from the Veteran Namepro guys on what you would do in this situation.

Thanks for your time

 

[b2b]

It all depends on circumstance, especially your circumstances.
Do you need money (in the sense that you don't want to be too greedy if you need the money that is, cause well everbody "needs" money right...) Do you think this would be the only seller ever? What are your intentions with this domain? There are so many questions to ask yourself.

I personally think it's always best not too overthink in these cases and just do what feels right according to you...

I would personally ask $150.000 to get $50.000. And also mention that it's your asking price.

If they got $4.900.000 in funding, then $49.000 would be 1% of their funds. So around the $50.000 would be right I guess...

Anyway good luck!

Going to snooze now!

 

[discobull]

Hi Namepros,

I received an email today about a 5 letter dot com that I have. It's not a real word but a brandable 5 letter and it's only a few years old. The company yesterday registered the .co, .net, and .org of the same name. I was able to find out that the email I received is from the IP lawyer for the company that wants the name.

The company is in the Genetics/Biotechnology field and received seed funding of $2 million one year ago and a Series A round of $2.9 million about 1 month ago.

I think the name can easily sell in the low-mid $XX,XXX range to this company. I would normally throw out a good number and see if it sticks but I do believe this can be one of those "special sales" that I could leave a lot of money on the table. I would like to seek others opinions first from the Veteran Namepro guys on what you would do in this situation.

Thanks for your time

It's tough to say what kind of potential there is here without knowing what kinds of expenses they're looking at to get themselves going. Depending on the scope of their project, they might be working with a tight budget so I'd be careful about letting my expectations get the best of me and then potentially miss out on a good deal simply because I sure I could get a great one. Anything is possible, but I personally have a tough time imagining any startup with just a few million in capital spending 6 figures of that money on a domain. Keep in mind that at this point their entire investment in this brand might be the 50 or so dollars they spent hand registering the domain in those other extensions. That's not a difficult investment to walk away from in the event that they deem the .com unreasonably priced. If it were me, I would get them to make the first offer and then try to see how much more I could get them to go up without ever declining any offer they make along the way ( assuming the opening offer is attractive enough ). Good luck with it!

 

[iowadawg]

Ask for a million dollars!
As all you want to know, how much can my domain bring from this company.
But be careful, if they regged other extensions, got a lawyer to you an email, that hey, they may want the domain taken from you.
Especially if it is just parked.

 

[equity78]

It's tough to say what kind of potential there is here without knowing what kinds of expenses they're looking at to get themselves going. Depending on the scope of their project, they might be working with a tight budget so I'd be careful about letting my expectations get the best of me and then potentially miss out on a good deal simply because I sure I could get a great one. Anything is possible, but I personally have a tough time imagining any startup with just a few million in capital spending 6 figures of that money on a domain. Keep in mind that at this point their entire investment in this brand might be the 50 or so dollars they spent hand registering the domain in those other extensions. That's not a difficult investment to walk away from in the event that they deem the .com unreasonably priced. If it were me, I would get them to make the first offer and then try to see how much more I could get them to go up without ever declining any offer they make along the way ( assuming the opening offer is attractive enough ). Good luck with it!

Good points, companies in those fields tend to burn through a lot of cash, a pure pharmaceutical company already established, then I say you ask for big money because I know of deals where they have paid it.

This is interesting, they have an IP lawyer handling it so they are not going to be a lowballer, but they are probably not going to be paying any amount to get the domain name. When the numbers get too high someone in a meeting says the .co fine, plenty of start ups use them. So you want to make the sale and get a great return but not think you have a winning poweball ticket.

The other thing is people know when a name is made up vs a generic one word or LLL.com. So they know there are not a ton of competitors for the name, when its an LLL.com with 18 companies matching those acronyms they know there is competition for the name.

You could start at $75,000 with the hopes of closing in the $35,000 range maybe $99,000 to get $50,000. I prefer $99,000 over the $100,000 because there is that psychological factor going on in a boardroom, "They want six figures, SIX FIGURES !"

 

[forge]

Set a realistic price, not outlandish solely based on a buyer's perceived deep pockets.

If you prefer to gamble, be prepared to lose your bet.

It's brandable, their options are many IMO.

 

[Jason.tv]

10k is fair for both parties to close it today

 

[baldonius]

I'd be careful with this, especially as you were contacted by an IP lawyer. I think they're trying to bait you into saying that you bought it with the sole intention to sell.

Don't immediately act like you're willing to sell, make up some BS about selling not being your first intention. Because that could work against you if they decide to go for a UDRP.

Act like you're 'willing to consider selling it' or something like that, 'if a suitable offer is presented'.

Coincidentally that is also an effective negotiation tactic.

 

[namey]

Baldonius raises a good point, be careful.

Might also consider saying "it is not for sale I have plans for it" and push them to make an offer.

 

[baseballworld]

I'd be careful with this, especially as you were contacted by an IP lawyer. I think they're trying to bait you into saying that you bought it with the sole intention to sell.

Don't immediately act like you're willing to sell, make up some BS about selling not being your first intention. Because that could work against you if they decide to go for a UDRP.

Act like you're 'willing to consider selling it' or something like that, 'if a suitable offer is presented'.

Coincidentally that is also an effective negotiation tactic.

He has a good point. Companies sometimes will do anything to make you insert your foot in your mouth. Remember they wanna keep expenses to a minimum and taking it from you would be a minimum compared to your guys 1% theory.

 

[Edward Smeu]

At this point, if you ever wanted to develop the domain, they are your competition. If you want to sell to them as requested it should be a premium end-user price. Surely 5 figures but keep it fair and don't push them, they may still have other options. Best of luck in getting the best value.

 

[venturefile.com]

I would say that you bought it with a future project in mind but for the right price are willing to part with it. This will make you look like you had development plans and didn't just purchase it to resell it and it will also give them the added incentive to buy it because if you develop it into something (you won't but that is the thought process you give them..) it can hurt their brand.

This also puts the ball into their court to make the first offer and to make a good one.. Then when they make the first offer you can take it from there. Their first offer will tell you a lot. Good luck!

 

[jamesosix]

surely if its just a brandable word and he regged it before they became an entity, the law favours the OP as he had no way to predict this startup would...start up? I'm no lawyer, so dont take my comment as legal advice!

 

[Shimmy]

I'd ask low 6 figures. I'd take the gamble and not care if they decline, and hope they'd succeed and then get even more later

 

[Nattydomain]

What ever you do keep us posted. We dream sometimes of this but with the research you done this one is a bit tricky. Good luck hope you do well!

 

[slimjim270]

Hi Namepros,

I received an email today about a 5 letter dot com that I have. It's not a real word but a brandable 5 letter and it's only a few years old. The company yesterday registered the .co, .net, and .org of the same name. I was able to find out that the email I received is from the IP lawyer for the company that wants the name.

The company is in the Genetics/Biotechnology field and received seed funding of $2 million one year ago and a Series A round of $2.9 million about 1 month ago.

I think the name can easily sell in the low-mid $XX,XXX range to this company. I would normally throw out a good number and see if it sticks but I do believe this can be one of those "special sales" that I could leave a lot of money on the table. I would like to seek others opinions first from the Veteran Namepro guys on what you would do in this situation.

Thanks for your time

I might suggest a different strategy...

1. TM - search uspto.gov to see if the USPTO recently received a Trademark application for the 5L term. If so, what was the IC class? Date of 1st use? 1A or 1B filing?

2. DM - perform some research about the company to find out who the decision makers (DM) are in the company. Who is the CEO, Board members, VP of Marketing/Sales, etc? Are they aligned with a marketing agency? If so, who? Local or national agency? If local, who is the owner of the agency?

3. History - great job finding details about their recent funding history. Find more detail about who has a vested interest? Who are the players or influencers? Who influences decision making on capital purchases?

4. 5L - what have you done with the 5L domain to date? Parked? Sedo? Niche Site? How long have you owned it? What is the history of the domain with Archive.org?

Suggestion - opportunity is knocking... don't answer the door, they may have a gun. Instead, peak out the side window to find out more about the landscape. Are they approaching friendly or offensive? Research before stardom (hold off on thinking payout, start with building a solid sales strategy / game plan). To build your strategy, you need to know the landscape, more about who you are negotiating with, what is their business plan, and what action have they already taken to build this brand? Immediately responding to the attorney (imo) is a bad strategy. Attorneys are not decision makers. Executives and investors are. An attorney's role is to document (and protect) the intentions of an executive and the company DM's.

Strategy - This could be a hero (or zero) deal. Worse, they have investor's funds, so the Board/CEO will not be shy to spend attorney fees to protect their investor's interest. Before showing your hand or playing any cards, gather more info, then go on the offensive by 1) taking steps to develop your "original" plan for the domain (a plan that - coincidentally - was not in conflict with their TM filing and prior to their 1st use of the term), 2) after doing so, establish communication with a DM at the company (an internal champion) to initiate negotiations to in some way "partner to save everyone money", and 3) don't be greedy - a little bit of something is better than a whole lot of nothing.

Pitch - The pitch to the DM could be something along the lines of "It's been brought to my attention that we are developing a brand name in different industries -yours being [bio tech] mine being [donkey toenails]. Rather than either of us wasting cash-flow on prolonged [expensive] and time consuming events that doesn't benefit either of our investors, are you receptive to some level of partnering?" The pitch should be investor/capital focused and not a clumsy sales pitch to hock a tech product. Operating expenses (less than $5,000) typically can be handled at the VP level, capital purchases are a higher level decision in the corporate world. Why capital focused? Only the Board, CEO, or CFO typically make capital decisions in a start-up. Attorneys do not make capital decisions, vested executives (owners) do. The pitch should be via phone on a Friday @ 8:30am (prior to a secretary or gate keeper arriving to the office. Screw sending an email that could simply be forwarded to their attorney. An email forwarded to an attorney puts you in a reactive mode. You want to drive, not be driven. Take the initiative and kill this!

Overall, your goal is to develop a collaborative/respectful dialogue with a company DM, not a confrontational one with an attorney. If the DM bites, they will tell the attorney to make it happen, then it's simply a documentation process.

I hope the suggestions are helpful.

Best of luck!!

-Jim

 

[slimjim270]

Good points, companies in those fields tend to burn through a lot of cash, a pure pharmaceutical company already established, then I say you ask for big money because I know of deals where they have paid it.

This is interesting, they have an IP lawyer handling it so they are not going to be a lowballer, but they are probably not going to be paying any amount to get the domain name. When the numbers get too high someone in a meeting says the .co fine, plenty of start ups use them. So you want to make the sale and get a great return but not think you have a winning poweball ticket.

The other thing is people know when a name is made up vs a generic one word or LLL.com. So they know there are not a ton of competitors for the name, when its an LLL.com with 18 companies matching those acronyms they know there is competition for the name.

You could start at $75,000 with the hopes of closing in the $35,000 range maybe $99,000 to get $50,000. I prefer $99,000 over the $100,000 because there is that psychological factor going on in a boardroom, "They want six figures, SIX FIGURES !"

I agree with @discobull and @equity78 on the topic. Great points.

An initial funding of $2 M over the 1st 2 years means they are likely burning close to $100K in operating expenses (per month).

$2 M is a lot of money to us... but to a start-up its crumbs to survive on until they get the product into the marketplace and start generating cash-flow (receivables).

The $2.9M new round of funding... the Board/CEO might choke on a $100K cash expense (that's likely an entire month of payroll expense)... the CFO will certainly squawk over it... Curious, who was listed in the recent round of $2.9M funding? Venture capitalist? Individual angels? Or operating management?

Any knowledge to if their product / service is generating sales yet? Or is the product still in the "development" stage and not in the marketplace (burning their existing cash at an accelerating pace as they race to market)?

An investor (Board member) will be more likely to spend money on marketing and branding efforts if the product is already generating sales. A good litmus test as a deal gauge.

-Jim

 

[forge]

I would say that you bought it with a future project in mind but for the right price are willing to part with it. This will make you look like you had development plans and didn't just purchase it to resell it

Unless they read domaining forums (do you think anybody actually buys this line anymore?)

 

[forge]

2) after doing so, establish communication with a DM at the company (an internal champion) to initiate negotiations to in some way "partner to save everyone money"

Not saying the partnering idea is an impossibility, but I think in the far majority of cases the proposal will be met with suppressed laughter. Just not realistic, IMHO.

I like a lot of your other points BTW.

Though the idea of them blowing 1-2% of their coffers on a made-up word is pie in the sky thinking. YMMV.

If this was a "category killer" keyword domain, it'd be a completely different ballgame IMO. Except that without knowing the specific domain name, it's almost impossible to ascertain to any accurate degree.

 

[slimjim270]

@forge -

You're probably right. It might raise a chuckle. But if not, you're in for a fun ride.

I was hoping to suggest an alternative to an email volleyball match with a (non-decision making) attorney.

Not a fan of negotiating with pimps (2nd party players). I prefer working directly with someone who can make decisions and engage in a productive dialogue.

If shooting for a big bang, I have called CEO's of public companies on a Saturday morning @ 9:00am and left messages. No gatekeepers and you'd be surprised how many CEO's work on Saturday mornings when there are no distractions in the office. A forwarded voice message by the CEO to an underling VP (the VP has no choice but to take action, otherwise risks being viewed as non-responsive in management's eyes).

(2) M&A deals I handled a couple years back kicked off with leaving a Saturday morning phone message. Almost all executives personally check their voice messages over the weekend. Few gate keepers work weekend hours to scrub their boss' voicemail box. You'll chuckle at this one... once I got a UK CEO ($2B public company) on the phone "accidentally" as he stopped in the office over the weekend to pick up a few items prior to a trip. 20 minutes later, he gave me the direct line for the EVP of Finance. On Monday the EVP gatekeeper passed me through when I shared I had spoken with "Ricky" (the CEO) that weekend.

If you bring value to a company... have a pair and go for it!

-Jim