I can’t even tell you how many times I have been asked if I would be willing to take on an investment. It’s not a regular occurrence, but it has happened a bunch of times over the years. My answer has always been no for two reasons – I don’t need the capital and I don’t need the stress of making money for someone else. I like having a relatively small business where I only have to worry about my own investments. It could make me more risk averse to invest someone else’s money, and risk aversion is not great when buying high value domain names.
There is utility in taking on outside capital though. If I raised $10 million in investment capital, I could definitely put those funds to good use and buy a small portfolio of exceptional domain names. Although there is more capital at risk with higher value domain names, I believe there is also the opportunity for much greater returns (total rather than %).
One big issue, aside from the two mentioned above, is that investors would likely want to see a return on their investment in the shorter term. With domain names, a $250,000 investment could sell for $500k+ in a week or sit for years without earning much income in the meantime. An investor who has $2.5 million to invest would likely prefer to buy a piece of physical real estate that has renters or commercial tenants to derive regular income.
I know of a few people who have taken on investors’ money to buy domain names or build websites on domain names. I am not sure how they have done, but that is a different type of business
Have you taken on outside investment capital?
Note: A revamped version of DomainInvesting.com was relaunched this morning. I will share more details in an article later on this afternoon. If you see anything strange, please note it and share in the subsequent article so they can be addressed.