.Choice: With $100M+ Raised, Donuts Launches A Registry For New Top-Level Domain Names

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Last year, the Internet Corporation for Assigned Names and Numbers (ICANN) approved a new initiative that is set to significantly expand the number of generic top-level domains (gTLDs), allowing companies, organizations, and anyone in between to buy their own domain name extensions — like .google, .rip, .ROFL, etc.

ICANN recently closed its window for domain name applications, and last week, for example, Frederic covered Google’s announcement of the domains it has applied for (.google, .docs, .youtube, and .lol to name a few), which was yet another indication that it won’t be long before gTLDs of this ilk will be common on the Web.

ICANN expects to create between 300 and 1,000 new gTLDs each year, joining the 28 ubiquitous Top-Level Domains in play today, like .com, .org., .net, and so on. Of course, as Frederic noted, there’s been plenty of resistance against the new domain order, with companies complaining that the new process (which requires applications to pay a $185K evaluation fee, with more added on once apps are accepted) will require them to cough up too much dinero in an effort to secure trademarks.

However, Google is far from being alone in its application for new TLDs — there are plenty more that see this is an opportunity. Today, the appealingly-named Donuts, Inc. is launching to the world, simultaneously announcing a move to expand the Internet namespace with a not-so-bite-sized set of 307 applications for new gTLDs. Donuts, a registry for new top-level domain names, believes that this expansion will help bring new industry competition and a fresh set of choices to the world’s Internet users looking for better, more specific domains names for cheap for their products and services.

To do so, Donuts is announcing that it has raised over $100 million in capital from private equity and venture funds to help it secure and operate each applied-for domain name, with contributing investors including Austin Ventures, Adams Street Partners, Emergence Capital Partners, TL Ventures, Generation Partners, and co-founder and chief exec Paul Stahura’s investment fund, Stahurricane, to name a few. The company also said that it’s ready to raise additional funding if necessary, and has obtained a revolving credit facility with Comerica Bank.

Donuts co-founder and EVP Dan Schindler tells us that Donuts leadership believes that the current namespace, which is the “very fulcrum of commercial online navigation,” is extremely constrained today and that both consumers and businesses are in dire need of more choice when it comes to their Internet identities.

With more than 125 million total names in the top five TLDs (with 75 percent of those being .com domains), finding a solid, brand-able web address has become a serious problem. The co-founder believes that opening the doors to a variety of new domain names will bring some much-needed competition to the long-enthroned .coms of the world, although just how much competition (and how much disruption) remains to be seen.

But, Donuts does have a point that competition implicitly means lower prices, with names in new TLDS are going to be far, far less expensive than .com names at auction or in the aftermarket. As Schindler suggests, buying theater.tickets at $500 is better than theatertickets.com at $125,000.

And this is where the name “Donuts” comes in — although the title seem a bit random, the co-founders say that the reasoning is simple in that donuts are universally beloved and connote a variety of choice. Can’t argue with them there. So, of the 307 applications that Donuts has filed with ICANN, none of them, the founder say, are for branded domain names — or those that are trademarked. Which means that, when ICANN shares its list of applied-for strings next week, you won’t see it vying for .google or .oracle.

However, Donuts leadership also made it clear that, though its name might make it seem otherwise, the company will not be selling domains to consumers, or the end-user, instead selling to popular, widely-used registries like GoDaddy or Hover. It will also be striking a partnership with Demand Media, which will become its registry services provider.

Donuts also expects that the leadership team that it has assembled will be an asset and a leg up over the competition that is sure to arise, as it’s founded and managed by executives who are veterans in registry operations and industry regulations, the majority of whom have in some way advised or worked with ICANN. Donuts’ newly appointed CFO Kevin Wilson, for example, is the former CFO of ICANN.

With its new funding in tow, the Washington-based startup will be looking to grow its team as it positions itself to become a big player in what it expects to be a billion-dollar-plus market, says co-founder Stahura:

Namespace expansion will help the Internet continue its evolution toward specificity for users, some of them altogether new to the Internet … Donuts will play a significant role in making that expansion stable, secure and inclusive for all end-users and consumers.

For more on Donuts, Inc., check them out at home here.