Will VC Demand Boost Domain Prices?

MSNBC has a story about the emergence of domain speculation as a profitable business (link via DomainingBlog), noting that "a turnaround last year suggests that a legitimate domain market may be booming again."

That's hardly news. A more interesting trend was highlighted late in the story: venture capital interest in the domain name market. This is a natural outcome of the land rush following the Ult-Search-Marchex deal, but it's interesting to see the story fleshed out a bit:

Marc Ostrofsky, the veteran domain speculator behind the record-breaking $7.5 million sale of Business.com in 1999, is forming a $250 million "Internet real estate investment trust." He and his partner, Houston investment banker Bob Martin, have spoken with interested hedge fund managers and venture capital firms in New York, Los Angeles and Silicon Valley. "When the investment community heard what we’re playing with, they liked it," says Ostrofsky. "They liken it to a land rush."

The bottom line: more money is likely to flow into the domain name market, boosting demand and pricing. The additional money flowing into the market - whether from investment-fueled outfits like Ostrofsky's or newbie speculators who just read about the business on MSNBC - will probably mean more competive auctions. Unless, of course, domain owners who've been sitting on valuable names decide that now is the time to sell, boosting inventory. Either way, there's plenty of action all ahead.

  Posted by RichM May 12, 2005 | Permalink | Newsletter

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Will VC Demand Boost Domain Prices? - May 12, 2005





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