Donuts raises $100m for 300+ new gTLDs

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Posted 05 June 2012 15:19pm by Patricio Robles with 0 comments

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Google may have produced a few chuckles with its application to run a .lol gTLD, but some companies believe there's serious cash to be made in the so-called .brand domains that ICANN is going to be approving.

One such company, Donuts, is so confident that the new gTLDs are going to be a hit that it's reportedly raised a $100m Series A round of funding to operate a portfolio of them.

According to the Wall Street Journal, Donuts applied to operate 307 gTLDs. At $185,000 per application, Donuts has already apparently committed over $56m. With that in mind, it's not surprising to learn that Donuts has also secured a revolving line of credit with a major bank.

Paul Stahura, a former Demand Media executive and founder of Donuts, explained the company's value proposition this way:

Right now it's difficult to find a good name, a memorable name in '.com.' We will provide specificity and choice. If you're a doctor, let's say, you could get '.doctor.' If you have a small cleaning business you might get '.cleaning.'

For some business owners, that will certainly be an appealing pitch. But will the new gTLDs actually help businesses stand out online? As I've written before, there's good reason to be skeptical about the new gTLDs. Consumer confusion is the biggest concern, and owners of domains using these new gTLDs will be relying on the operators to get the word out and ensure that when consumers see something.whatever, they know what it is and, more importantly, trust it the same way they might something.com.

There's no guarantee that heavily-funded, highly-leveraged upstart gTLD operators will be able to do a good job of branding, especially across hundreds of gTLDs.

This, of course, doesn't mean that there isn't quick money to be made. Registrars like GoDaddy will certainly be eager to pitch their customers on new gTLDs, just as they did .co domains, and you can be sure some will buy them believing that mydesiredname.tld is the next best thing to mydesiredname.com. But if past is prologue, disappointment may follow.