By: Jon Avidor
Our client, who makes virtual reality entertainment apps, forwarded an e-mail from a private investigator. “Is this for real?” they asked. The PI had offered to purchase their URL for 6 figures. The deal was so good that we presumed the offer must be coming from a Nigerian prince, or maybe a Russian oligarch promising riches in exchange for some personal contact information. Anyway, we decided to respond, and see where it led. “The only way our client will consider selling this name, its URL and access to all of its social media accounts, is if you are willing to offer enough for them to rebrand their consumer facing company, which would take at least 7 figures to do right,” we responded. A few e-mails later, we actually came to an agreement. Even so, we still thought we were wasting our time.
To our surprise, we actually got a signed agreement in return, and consummated a real deal, with funds wired directly to our client without the need for escrow, before our client even took its first steps. Once the wire landed, our team transformed the company in 5 days, without losing any early stage momentum or consumers who use our client’s software. It actually came in as planned, and nothing bad happened. Our client’s brand and URL actually changed hands fair and square.
We never heard from any oligarchs or Nigerian princes after that, but just to be safe, before closing the deal, we did ask our client, “if this is a giant brand, or company, are you going to be mad that you didn’t ask for more?” They actually already had their suspicions, but they said no, they would still consider it a good deal, at the advice of counsel. Sure enough, a few days later word came out that a giant brand was launching a new product using our client’s previous name.
This isn’t the big exit that entrepreneurs dream about in their bootstrapped co-working space. Still, for a company in the midst of a seed round carefully deciding how to finance its next big software development and launch, this unexpected asset sale was a solid validation and provided a strong boost of adrenaline to the team. The money didn’t hurt, either. They had closed a significant financing round without giving away any equity.