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.
I wouldn’t take on any investors. One of the great aspects about domain speculation is the freedom that comes with speculating. Start with a $5K or $10K bank-roll after you have invested a few months studying and listening to veteran domainers and start buying dot-Coms with commercial meaning or brandable value. As Elliot stated, the domain name game can be liquid or illiquid it can be very stressful, but patience pays off. As a speculator, you can be your own boss and you lose that status when you take on $10 million in investor funds.
Ages ago I borrowed from my mom to buy my first domain. It was a LNN.org and when I saw it available, I felt the need to act urgently to obtain it. So I had my first pitch and raised something like $50 investment (including hosting expenses). It was actually a much cooler name at the time than it is now, since without nTLDs any 3-character domain looked kind of cool.
I hope you paid her back!
Yes, I have had. I vote not anymore.
With your new gTLD investments?
it was ccTLD domains 5 yrs ago
We are looking for one or more investors to purchase a percentage interest in our domain portfolio or a subset thereof. In any such arrangement there have to be safeguards for the investor(s), if they hold a minority interest, to protect against things like the majority owner(s) selling domains to associates for less than they are worth, so I wouldn’t advise anyone to invest in a portfolio without such safeguards in place.
Domainers are too cheap and greedy to share profits with other Investors.
Heck, most domain Investors won’t buy domains from each other unless the domain has expired. Lol
I started out on my own maxing out all my credit cards when I got started. Along the way I have taken on my share of investors. I’m glad to say all of them have made money on their initial investment, and then more money along the way; all of them have come back for more investments but there is only so much time. I probably get an offer at new partnership at least quarterly. My future is looking quite, smaller and simple.