Donuts has banked more than $100 million in funding for its top-level domain registry

By Editor June 12, 2012

Donuts_logoA Q&A with Donuts co-founder Dan Schindler. The Bellevue, Washington–based company was founded in 2010 and recently raised more than $100 million. Investors include Austin Ventures, Adams Street Partners, Emergence Capital, TL Ventures, Generation Partners, and Stahurricane.

SUB: Please describe what is, and the value proposition you bring to the domain market.

Schindler: Donuts is a registry for generic top-level domains, or gTLDs. A gTLD is the string of characters after the dot in a web address, like .com or .info. A registry is the service that maintains the master database for a gTLD to make sure there’s no repetition. There can only be one, for example.

Donuts has applied for 307 new gTLDs. All of these are actually generic in nature, meaning they’re made up of non-trademarked, dictionary terms. The new TLDs will be descriptive of all sorts of products, services, professions and causes.

Right now, it’s terribly hard to get a good domain name in the existing namespace, because all the good inventory is taken. The value of Donuts’ effort is that we will bring new and varied choices to registrants and end-users for creating an identity on the Internet, and with a level of specificity that will help them describe their objectives and reach new users. For example, if you’re in the theater tickets business in New York, is it easier and better to have, or Donuts’ TLDs will expand the Internet namespace and let people, business and causes open new identities online.

SUB: Who are your target users?

Schindler: Target users are businesses, families, individuals, product and service providers, causes and others—anyone looking to find a better, more specific way to build an identity on the Internet.

SUB: Who do you consider to be your competition?

Schindler: There will be some initial competition to secure the TLDs, because in some instances, there will be multiple applications for the same “string” of characters after the dot. Donuts, however, has resourced the company in a way that will help us secure every string for which we’ve applied, so we’re confident we’ll have plenty of options to show the marketplace. After that, there will be competition with existing TLDs, like .com, .net, .info and other generic names. However, new competition is one of the important goals of namespace expansion. So we’re confident we will be able to compete effectively while we give new options to registrants.

SUB: What differentiates from the competition?

Schindler: We are extremely well funded. We raised more than $100 million in funding from several top-tier private equity and venture capital funds. We have a management team comprised of industry veterans with years of experience in domain names. Once our TLDs are secured and in the marketplace, these ‘products’ will be differentiated by their very existence—there will be no other TLD identical to the ones we administer. At that point, we can successfully differentiate Donuts by the ability to provide fresh identity options, instead of consumers having to rely on the overcrowded .com and other TLDs.

SUB: When was the company founded and what were the first steps you took in establishing it?

Schindler: We were incorporated in 2010. The first step was the collaboration of our co-founders, who had studied the approaching opening of the namespace and decided to join forces.

SUB: What was the inspiration behind the idea for Was there an ‘aha’ moment, or was the idea more gradual in developing?

Schindler: The founders all understood well the opportunity in new TLDs. I’m not sure there was an ‘a-ha’ moment, but it was pretty obvious the opportunity was very good for those who understood the industry and the opportunity it presented.

SUB: What have the most significant obstacles been so far to building the company?

Schindler: Not many obstacles to building the company, but more a significant obstacle to getting to the point where we can apply for these TLDs. Since ICANN opened this process more than six years ago, it’s been a long road. The Internet community has gone to great pains to assure itself and others that the Internet has sufficient capacity to absorb more TLDs and to build in protections against abuse.  The good news is we’re well past that point, and everyone is ready to move forward.

SUB: You recently raised $100 million in Series A funding. What are your plans for the funds?

Schindler: It was more than $100 million, actually, though we haven’t reported the exact number. We devoted a good share of that to the cost of applying for the TLDs. Additional parts of our funding—and we are able to secure additional funding if need be—will be given to the cost of building the organization, securing the TLDs, and preparing to launch them.

SUB: Do you plan to raise more outside funding in the near future?

Schindler: We have access to additional capital if the need presents itself.

SUB: What are your goals for over the next year or so?

Schindler: For the near term, it’s shepherding our applications through the evaluation process and securing the TLDs. That will take up most of the rest of 2012. Beyond that, we’ll be preparing our channel for distribution, continuing to be engaged in ICANN’s policymaking process, and continuing to build our Donuts team.

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