I just learned that Banks.com, a company that is publicly traded on the American Stock Exchange under ticker symbol BNX, has entered into a “sale-leaseback” agreement with domain financing company, Domain Capital.
It appears that Domain Capital financed the Banks.com domain name for $600,000, and Banks.com is required to make monthly payments of $14,273.96 for 5 years. With interest, the total amount Banks.com is required to pay over the course of the agreement is $856,437.60.
For me, it’s good to see publicly disclosed deals like this because it shows others that there are options for domain financing. I would imagine it could be tough to get a bank to give a loan on a domain name without a significant amount of red tape (if at all).
The guys at Domain Capital attend virtually every domain conference and tradeshow, and they know the market better than most, allowing both companies to strike a fair deal for a valuable domain asset. This allows a domain owner to get liquidity more easily.
The company filed a SEC Form 8-k to announce the details of this agreement.
The guys at Domain Capital are really good guys. Nice to see a deal like this.
Interesting deal, they have struggled to develop out the banks site, and its a super compeitive vertical, while its good for domain capital, it probably reflects down on the ability for small biz to get traditional financing for these types of ventures, using domains as collateral.
I came very close to doing a deal similar to this (much lower amount) in August of ’09 with a cloud computing start-up in sillycon valley for Broadscape.com – the deal was going to be for roughly 10% of the amount of the banks.com deal highlighted above, monthly payments over a 2-year period. Bottom line, they were broke after the initial infrastructure build-out and last time I checked, they aren’t even selling anything yet. Frankly, I’m glad the deal fell through, because I have rather ambitous plans for Broadscape.com…someday.
As a matter of fact, this article reminded me that I hadn’t yet registered broadscape.tv (did just a few minutes ago, thanks Andrew 🙂
Sorry, meant, “thanks, Elliot”… :0)
Elliot–do you know how to obtain the listed exhibits?
Here you go:
http://www.sec.gov/Archives/edgar/data/1341470/000119312510279485/0001193125-10-279485-index.htm
Again a great deal for domain capital, but 15% financing charge doesnt speak well to the financial picture at banks.com imo as they are puplically traded company
“The guys at Domain Capital are really good guys. Nice to see a deal like this.”
Good guys, in what sense, to have a beer with or what?
This is a business transaction, at 15% a year and will probably end up owning Banks.com for peanuts (10 day late in paying, IIRC, and they own the name). It’s a smart business decision when Banks.com is desperate, that’s all. Nothing “nice” or “good guy-ish” about it, more like grave dancing, but that’s business.
“more like grave dancing, but that’s business.”
@ Priv
Don’t you think if the company could have gotten financing for better terms elsewhere, they would have? Both parties agreed to the deal, and if you need money, you have to take the best terms you’re given.
IMO, an interest rate is based on many factors, including risk.
@ priv
Elliots blog is without a doubt the straight place to be …
i see the questionable element you refered to is creeping
in here for damage control on a regular basis.
We are not fooled and we are watching them as they
hover and misinform and confuse to exploit.
People with a checkered past making statements
about honesty is always suspect.
I hope they do not end up tarnishing this blogs reputation.
@ Zak
Huh? To what questionable element did priv refer? I also agree that the guys at DC are smart, savvy, and cool to have a drink with. I don’t see any
questionable elements” hanging around here.
Things musn’t be going well for them to need to get finance at 15%, traditional lenders mustn’t want to touch them right now.
I am on the fence, they may be savvy but word on the street was they weren’t doing that great when things dropped off about 2 years ago. From what I see (know) they over value most names and end up owning for a loss in a lot of cases.
Could be the high rate that pays covers their mistakes.
Thanks Elliot.