Why Asking For Equity May Not be a Good Idea

Elliot Silver
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I own a few domain names that receive acquisition interest from startups. I’ve always thought it would be neat to sell a domain name for cash plus an small interest in the company that is acquiring the name. If the company is hugely successful, the value of the domain name sale could soar.

After discussing quite a few deals that involved selling a domain name and receiving at least some of the consideration in equity, I have come to the conclusion that there are big issues for both parties.

From the sales perspective, selling a domain name for an equity stake requires the involvement of a good contract attorney that knows how to contractually protect the seller. I wouldn’t want to own an equity stake in an entity that turns out to be a worthless shell. I also don’t want my equity stake to be diluted nor do I want to be required to invest cash into the company, especially if the cash investment is substantial. Finally, I want to make sure I am protected if the startup fails or if the startup faces legal troubles. These are just a few items that need to be considered and negotiated in a deal that involves receiving equity.

Working with a lawyer can be

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Dave Evanson: Circa.com Sold for $150k

Elliot Silver
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According to a tweet this afternoon from Sedo domain broker Dave Evanson, Circa.com has sold for $150,000.

At the present time, it does not

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Explain the Reach of a Domain Name

Elliot Silver
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When negotiating the price of a domain name with a prospective buyer, I occasionally encounter resistance citing the size or reach of the prospect’s business. The buyer can’t afford to spend the asking price for a domain name because his or her company is small or not yet created. This resistance is understandable, but they need to understand why the domain name is more expensive than they can afford.

I am not a huge proponent of educating buyers about the value proposition of a domain name. If they have inquired about a particular domain name, they likely understand why the name has value without having to explain. However, it can be helpful to explain why the domain name is worth its asking price.

Let’s say a local

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How I Am Selling Domain Names These Days

Elliot Silver
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In the comment section on DSAD,  someone asked me how I am selling my domain names these days, and I thought I would share. I don’t think much has changed over the last couple of years, although I think I have been doing far less outbound marketing of my domain names than I was doing previously. I am not really sure why although perhaps it is because the kinds of domain names I am buying are not very conducive to outbound marketing.

It’s difficult to say whether sales are up or down because one or two large sales can throw off the numbers considerably, and I keep a relatively small portfolio of domain names. In addition, putting up no reserve auctions can skew the sales volume figures as well.

Listed below  are four ways I have been selling my domain names in the last few months:

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Magenta.com Acquired by Deutsche Telekom AG

Elliot Silver
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Magenta.com Whois

The largest public domain name sale reported by DNJournal last week was Magenta.com, which sold for $100,000 via DomainNameSales.com. Although I am sure it will be surpassed because it is only February, this $100k deal currently ranks as the 7th largest sale of the year on the DNJournal year to date sales report. According to DomainTools, Magenta.com is now owned by Deutsche Telekom AG.

If you visit Magenta.com right now, the domain name does not seem to resolve. I assume that is temporary because of the cost of the acquisition.

Deutsche Telekom seems to have

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How I Deal With Auction Locks During a Negotiation

Elliot Silver
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Depending on the auction house, domain name registrar, and type of auction, a domain name may be locked for a period of time following the conclusion of an auction. This means a domain name cannot be transferred out of a registrar, and it may in fact be locked within the account and unable to be pushed to another account (again, this may depend on the registrar).

Because I sometimes receive an inquiry during the auction lock period, I want to share a bit of advice with how I deal with this type of situation.  Before responding to the inquiry, I will do a bit more research on the history of the domain name.

If the auction was a private auction and not an expiry auction, I might contact the auction house and registrar and ask them to remove the lock for me. If the domain name has been

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