Domain Capital has refinanced the SanDiego.com domain name, providing $1M of working capital to the site.
Domain name financing company Domain Capital has refinanced SanDiego.com with a transaction value of over $1M. Based on the deal’s press release, it appears that this is a recapitalization. A recapitalization basically provides working capital to the asset owner based on the value of the underlying asset. In this case, SanDiego.com, which was registered back in the mid-90s, was able to generate over $1M to invest in its business. The company probably gave up an equity interest in the site, although I can’t confirm this.
In November, Austin Ventures announced a huge* recapitalization of CreditCards.com. It’s unclear the total value Austin Ventures placed on CreditCards.com, but Internet Real Estate Group (formerly DealJam) sold the domain for $2.75M in 2004. So clearly CreditCards.com has grown in value since the sale. Given the credit card market, CreditCards.com’s site traffic, and the high amount of type-in traffic, it wouldn’t surprise me if CreditCards.com was valued at close to $100M if not more.
But deals like Austin Ventures’ are one-off and opportunistic. It was probably more about the credit card market and CreditCards.com as a business than the domain name. Hopefully Domain Capital can be a go-to company for recapitalization; a company that understands the underlying value of domain names.
Another interesting aspect of the SanDiego.com deal is the prominance of the geo-domain market. City and location-specific domain names have a more centralized target audience compared to generic domains but they can generate substantial traffic. There’s even a geo-domain-specific trade group and conference, Associated Cities.
*The original version of this article stated that Austin Ventures had injected $6M into CreditCards.com. This was based on a blog entry by VC Ratings. CreditCards.com has informed me that this number is incorrect, and that neither CreditCards.com or Austin Ventures released the amount. Suffice it to say, however, that CreditCards.com was valued very high.
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