How Startups Can Shine like a Unicorn with 10% of the Initial Investment
Founders and investors are faced with many decisions on where to place valuable resources. Deciding on a domain name is a crucial & foundational decision that should not be overlooked or taken lightly.
Competition is becoming fierce for the Internet’s premier real estate. There are over 300,000 new brand names registered every year in the United States alone. Domain availability has become one of the first steps in the branding process. Selecting the successful domain for a startup can be the difference between taking an authoritative position or getting lost in the sea of competitors.
It can also be the difference between getting funding or hitting a wall. Investors like to see a hard asset on the books. It gives them a backstop on their investment and instills confidence in the business and team that they made a wise decision from the get go and didn’t try and be clever with a .ly or .io domain. At Media Options, about 40% of our business comes from domain acquisitions.
Although most of those are from VC funded startups, many are also new startups with limited funding. They want a top tier domain but don’t have the cash for it…yet. One of the mistakes that we see too often and should not happen, and doesn’t need to happen, is the choice of a weak domain name.
Often investors and founders know they will need to upgrade their domain down the road to get real traction and protect and hone their brand, yet still spend millions of dollars developing their business on a weak domain foundation. Internet Real Estate is the new physical real estate. This is a costly mistake especially when the domain puts the company in an inferior position by confusing consumers about their brand. Valuable marketing funds are spent to reinforce a domain and brand position that misses many elements of our C.O.N.V.E.R.T. checklist (see below).
Keep in mind that branding and domain strategies are intersecting so closely they are hard to separate. Developing your brand on a weak domain will impact the branding and consumer perception of your company, possibly forever. One solution to a startup’s funding challenge is working with the seller or broker to explore financing or leasing of a premium domain.
Many owners are willing to extend owner financing with a down payment. Others are willing to offer a lease or lease to own structure. Typically, they will do this at zero percent interest. Using this option allows a startup to shine like a Unicorn with a premium domain and build their business on a strong foundation, all the while preserving their valuable cash. We talk a lot about domains so we found it helpful to put our thoughts into an acronym. Here are several key points to consider when deciding upon the perfect domain.
C = Capture consumer intent * Does the domain capture consumer intent and reinforce your brand message? ** O = One word or simplicity in messaging ** * A branded domain should make the online experience effortless from the very first interaction. ** N = Nimble ** * Does the domain give you the ability to pivot with expansion? ** V = Viral & Verb ** * How will people talk about your brand thru your domain? * Can your domain be turned into a verb – think UBER or Google ** E = Elevate your brand to a position of authority ** * How does your brand compare and rank to the competition? A great domain should elevate your brand to a position of authority and instill trust. ** R = Radio test ** * Can you remember and spell your domain thirty minutes after they hear your brand mentioned in any advertisement or conversation? ** T = Trademark availability ** * Make sure the trademark is available.
Why domains matter:
A domain name does have an impact on the success of a company, this has been proven time and again. Choosing the correct domain creates simplicity and allows your customers to connect quickly with your brand and product offering.
The right domain allows companies without a large marketing budget to take a leadership position because they can stand out by controlling the very question or need the consumers are looking to fill. Marketing budgets are amplified when customers can easily remember a domain name.
A premium domain allows a brand to be instantly recognizable and memorable which will reduce customer acquisition cost, especially for repeat business.
Domains are also valuable assets for startup’s that increase their valuation:
A domain should be considered an asset on the books and instills confidence with investors. Domain names have been one of the best asset classes to invest in over the last 20 years, continuously appreciating faster than almost any other asset. An investment in a domain should not be thought of simply as an expense because of the ability to recapture the investment along with significant tax advantages such as rapid depreciation. A domain can be deducted as a marketing expense or depreciated over 5 to 10 years.
Branding and domain strategies today are inseparable. A domain name is often the first interaction that a consumer has with a company. Developing your brand on a strong foundation is an important & crucial decision. A startup should consider owner financing as an option to acquire the perfect domain that will create competitive advantage and reinforce their brand in an authoritative position.
Even if you can’t afford to buy the domain entirelyl up front, consider financing, leasing or some other structured payment terms that conserve your cash but allow you to get the perfect name from the get go.
These transactions can be secured through a third party Escrow service such as Escrow.com. You’ll get use of the domain after your first payment in most cases and can pay off the domain over time.
While it will not work for every domain this is an excellent way to acquire a premium domain that allows you to direct crucial investment funding to the marketing of your brand.
MediaOptions is an expert in private, discreet & professional domain acquisitions and if we can help, please reach out. We’ll help you determine fair market value, get a hold of hard to find owners & get you the best deal possible in the fastest and most efficient way possible, all while securing your identity.
About Media Options: Media Options is an industry-leading domain name broker, specializing in domain acquisitions and end user domain name sales. As a thought leader in domain name valuation, domain investment and online media strategy we provide consulting services to everyone from Startups looking for a brand to Fortune 500 companies looking to launch a new product or service. We also have tremendous experience and knowledge in the entire naming process.