A new pitch deck for Domain Venture Partners details how much money it thinks a new top level domain registry can generate.
In November I wrote about Domain Venture Partners’ pitch deck for new top level domain investors.
Today I received a new pitch deck, dated June of this year, detailing the investment funds’ capital raise to date and its plans for a new fund. It also has projections for what a typical new TLD will generate.
Domain Venture Partners is investing in new top level domains through Famous Four Media. Famous Four, through various corporate entities, applied for 60 top level domains.
The investor pitch says that that Domain Venture Partners PCC Limited (DVP I) raised £48.3M in commitments, which is below the £100 million goal. The group forecasts that if DVP I operates 30 registries (half of its applications) it will return 60x investment.
The new pitch is for Domain Venture Partners II (DVP II).
The group pitches the fund as a way to invest after much of the risk in new TLDs has been eliminated. It is looking to raise up to $400 million with a minimum investment of $1 million and expects a final close of November 2013.
How much could each new TLD string be worth? Here’s how Domain Venture Partners breaks down what it calls “averages” that would represent “projections for a standard gTLD registry”. It notes that specific registries could see results lower or higher than these.
Sunrise: 39,679 sales at $173.50 mean price = $6.9M revenue
Sunrise auction: 1,401 sales at $2,000 = $2.8M
Landrush: 34,375 sales at $111 = $3.8M
Landrush Auction: 45,697 sales at $213.34 = $9.7M
General Availability: 225,759 sales at $18.47 = $4.1M
Premium Domains: 5,500 sales at $202 = $1.1M
A few things jump out at me.
Based on the presentation, the fund is using results from previous top level domain launches, including .asia and .xxx, in its forecasts. There’s a big difference between new TLD launches and old ones. It’s called competition.
Domain investors, which the fund says are the key buyers during the landrush phase, won’t have the same amount to invest in each string as they had to invest in .asia, .xxx, .mobi, etc.
Also, the general availability price tag of $18.47 seems really high. Perhaps if you average in .xxx it makes sense, but the typical registry earns less than $10 per registration.
Another factor that may be different going forward are defensive registrations. With so many generic and descriptive TLDs coming to market, many trademark holders will likely reconsider their approach to defensive registrations.
Given that time has passed between the earlier pitch deck and this new one for DVP II, it’s interesting to compare some of the information in the first one.
On the forecast side, for example, the original one said that .xxx “is expected to raise more than $100 million of domain sales revenue through the sunrise period alone”. That was high.
The strings the company planned to apply for changed as well.
Major changes involve the team handing the deal. Verisign is out as registry provider in favor of Neustar and ARI. Global legal counsel has changed from Hogan Lovells to Steptoe & Johnson LLP and Wilmer Hale. Gibraltar Legal Counsel has changed from Triay and Triay to Isolas and the auditor has changed from Deloitte to KPMG.