Mastering this domain (name) will cost you
Call it the Internet’s version of the chicken and the egg: A business plan is created to…
Call it the Internet’s version of the chicken and the egg:
A business plan is created to get some use out of a clever domain name, then the domain name is sold to finance the business.
The irony is not lost on the founders of MutualFunds.com, a 10-month-old Boston startup company that desperately needs quick cash.
“A URL does not a company make,” says Abe Gorelick, senior vice president of marketing at the company, which is now calling itself the Financial Services Institute. “We need capital.”
The domain name was officially put up for sale three weeks ago, and company officials say they hope to fetch close to $1 million in a last-ditch effort to keep the business afloat.
The only other options are to sell or shut down the company, which provides online continuing education and licensing to the financial services industry.
The company’s dire situation was caused by a shortage of venture capital this year, says Donald Roberson, senior vice president of sales.
Realizing that venture backers were unlikely to provide a second round of financing, the company changed its business plan, turned to strategic partners for help and is preparing to sell its name – all to keep the lights on.
MutualFunds.com, a domain name originally registered in 1994 by Nvest Cos. LP, the Boston investment management company, started out as a comprehensive investor-oriented website. Last year, the name was quietly linked to an Nvest mutual fund line.
The value of the name represented nearly a quarter of $4 million in seed capital for the new venture.
In essence, what Nvest paid $35 for in 1994 was valued at $750,000 in 1999, helping Nvest take a 47% ownership stake in the business.
For Nvest, netting $1 million for the domain name would represent a cumulative six-year return of about 28,570%.
The initial business plan included a mutual fund platform, analytical tools, recruiting and career management, as well as the distance-learning component.
However, Mr. Roberson says, the venture capitalists were turned off by the emphasis on retail customers, a model that has gone out of fashion since the spring market correction.
Thus, the business plan was streamlined to focus almost exclusively on online learning, an area where the financial services industry is considered behind the curve.
Since the reorganization, the staff of 18 has channeled its energy to get career development courses, tests and licensing requirements online so that they can be accessed by the estimated 5 million people working in the financial services industry.
“It seems we’re on the front edge of this distance learning,” Mr. Roberson says. “We have a real product here.”
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