Thoughts

Andrew Miller

July 28, 2024

How the Macro Economics of Venture Capital are Affecting the Domain Name Market

I have been posting often about the macro economic and VC climate. As a recap, 2023 was a challenging year for VC’s, maybe one of the most statistically off years I can remember, and their portfolio companies felt the ramifications. The most valuable exact match, category defining domain names that we invest in/advise on also were affected, especially brandable domains, largely acquired by these venture backed companies that are either looking to rebrand, have their global address match its brand (ie: HelloPublic becoming Public*com) or upgrading from a much riskier, less effective secondary TLD (ie .io) to .com. With that said, the end of 2023 and Q1 2024 were record breaking for us at Hilco Digital Assets. We oversaw 5 of the most valuable domain name transactions of all time. For maybe the first time since 1998, venture backed companies are open to, and even pushing, equity as part of the payment for domain name acquisitions. Usually, equity is held on-to like a dog holds its bone. This past spring, we did a deal that involved Series A equity, and recently we have had multiple negotiations where equity is being offered. From 2020-22, exact match domains were selling at the strongest prices and fastest pace I ever recall, but now, there are instances where companies are waiting for sunnier, more certain days, lower interest rates, freer flowing VC funds, more robust valuations, and the resolution of the election. I often use the term “marinate” when it comes to domain names. We speak with hundreds of companies monthly on relevant domains and just because they are not ready to acquire today, does not mean they will not do so when the timing aligns. I can share countless case studies of just this, including Gold*com, which I speak about in my keynotes and podcasts, https://lnkd.in/en92WFSG. I have never had more conviction that the most premium exact match, category domain name assets are more strategically important now than in any time in history, which some of our use cases reflect on https://lnkd.in/eFS_NYXp. All of the domain assets we own or oversee are at HilcoDigital.com/domains.

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