Why asking for equity may not be a good option

domainking131

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Staff member
From the sales perspective, selling a domain name for an equity stake requires the involvement of a good contract attorney that knows how to contractually protect the seller. I wouldn’t want to own an equity stake in an entity that turns out to be a worthless shell. I also don’t want my equity stake to be diluted nor do I want to be required to invest cash into the company, especially if the cash investment is substantial. Finally, I want to make sure I am protected if the startup fails or if the startup faces legal troubles. These are just a few items that need to be considered and negotiated in a deal that involves receiving equity.

From a buyer’s perspective, it can be difficult to deal with a domain investor who isn’t all that knowledgeable about startups and their needs. No startup founder is going to give up a ridiculous amount of equity to buy the domain name, so a domain owner who asks for a large percentage (but will play no role in the startup) is being difficult.



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