Spending Investor Money To Buy Domain Name For Your Startup - Is It Worth It?

Domain names hold great significance when it comes to company growth, especially in the context of online growth. Although domain names are not as important as they were when the first wave of the internet occurred, they hold a great value for your brand identity, and play an important role in marketing strategies and also in your capital raising abilities. While traffic generated through type-in sources keeps going down, as a result of more access to services on mobile and apps, domain names still continue to be a vital part of your brand.

A domain name that is considered to be good tends to catch people’s attention, is easy to remember, such that people prefer to visit your website over others. Deciding on a good domain can turn out to be a daunting task that may leave you confused. Just like your brand name plays an important role in reflecting the identity of your business in the offline context as well as the online context, the domain name is that unique name or identity with which the audience will associate your brand. After all, it is the domain name that people enter into the search option for looking up your website. Particularly in today’s times, when the internet is the one destination where you can gather information about anything and everything, your domain name becomes a part of your identity online.

Potential Factors For Weighing A Domain Name - The Investors’ Perspective

Before potential investors may get involved with your company, there are some factors about your domain name that they may consider before they actually engage:

Aligning To Your Business

If you look at it from the point of view of investors, the domain name should bring a good ROI. For that, your domain name should be one that is reflective of your business. In other words, your domain name should align with the name of your business.

Search Engine Optimization

Internet search rankings can be a major factor in pushing your brand’s growth online. The more likely it is for your brand to show up on the first page itself, the better likely are you to be discovered. Domain names which are keyword rich are highly likely to get a boost on the search rankings. If the domain name is an exact match to a keyword, it is going to bring even better results. It is recommended that the homepage of your website should also be optimized for keyword search. If your domain name is SEO-friendly, you are at a better position of getting discovered by the target audience and this becomes an important factor that investors look out for while they invest in companies.

The Framing Of Domain Names

One very important factor that an investor would consider when they fund you is that the domain name should be framed in such a manner that it is easily memorable and catches the attention of the audience. Investors tend to be particular that the startup’s name should be easy to pronounce and should not be confusing at all. It should be short, may include a numeral and should be dictionary-based words.

Switching Domain Names

Picking the right domain name at an early stage is highly recommended given the penalties associated with the switching of domain names. One of the drawbacks associated with making a switch is that the branding as well as SEO equity associated with the old domain name will be jeopardized as a result. The entire process to buy domain and make the shift from one domain name to another and shifting the website is a very long and time consuming one. Not only that, all your material with the previous domain name will also need a change. This can also turn out to be a very long procedure. Investors may be happy to oblige by letting you spend VC money on a domain name if you get a good deal and can buy domain name that is fantastic in all respects, but they are also well aware that the startup should have absolutely no loose ends when it comes to migrating a website without standing a chance to lose potential SEO rankings and traffic.

Evaluation Of Domain Names

Many investors are using valuations tools that can be found online. Automated tools for valuation, including valuate.com and estibot.com weigh domain names by the backlinks, search traffic and related information to measure the value of the domain. It has been recommended that if you are a startup backed up by a venture capitalist, you should not share personal information in order to avoid getting the domain name evaluated as per your status. If a potential seller knows that your company is funded, they will likely increase the sale price of the domain.

You should watch out for signs indicating that the conversation will take you nowhere and should avoid taking the conversation further in these cases. If you do get a domain name at an affordable price, you should still negotiate it so that the seller doesn’t feel suspicious or get a sense that they are selling their domain for cheap.  Firms like Escrow keep a hold on the funds until the name has been transferred. As a startup you can also try and strike a deal with the domain owner to “rent” the domain name - you’d pay a fixed monthly fee to the domain owner for a certain duration, and a final price that the seller would sell you the domain name for at the end of the duration. This will give the startup time to setup and run their business, with a domain name of their choice, until they have the funds and business in place to actually make the purchase. That way, even if the business doesn’t take off as planned, the investor money spent on the domain name is significantly reduced.

It's not always possible to buy a domain name from someone at a price that you're happy to spend. If that is the case it's a good idea to brainstorm and come up with a domain name that has still not been taken by someone else. It is recommended to start your company with a very minimal cost domain name, preferably a dot com. This will keep costs low, unless you are a big business and are willing to pay what it costs to buy domain name you want, even though it's taken.

The Domain name generator offered by Shopify

If you see that buying a prized domain from someone can turn out be a costly and cumbersome procedure, you may come up with a new domain name with Shopify’s domain generator tool. The domain name generator tool offered by Shopify will help solve this problem of yours by suggesting domain name options and combinations that are available in the market at significantly lower prices. The domain generator by Shopify is particularly useful for e-commerce startups.

Author Profile:

Olivia: Content Marketer: I am 29 years old and a successful content marketer at Linksly. I have been working in the content marketing field for about 10 years now, it’s like my passion and I know how to play with words in a way that actually can help in the promotion of products and services.