After Verisign’s sluggish year, ICANN misses funding goal by $2 million

ICANN’s fiscal 2023 revenue came in $2 million light when compared to its budget, the annual report published today shows.

The Org blamed lower-than-expected transaction fees for the shortfall, suggesting the domain industry wasn’t quite as buoyant as its accountants had hoped.

Funding for the year came in at $150 million against a budgeted target of $152 million.

The period covered is July 1, 2022 to June 30, 2023, a period in which Verisign — ICANN’s biggest contributor by some margin — repeatedly lowered its revenue estimates from .com and .net sales.

This is not a coincidence. The two outfits’ fates are intertwined. Verisign funded ICANN to the tune of $49.7 million from its legacy gTLD business in FY23, up only slightly from $49.5 million in FY22.

Overall, ICANN said that its revenue from registry transactions was $60 million versus its budget estimate of $62 million, and that registrar transactions revenue was $39 million versus its $41 million estimate.

Other registrar fees and registry fixed fees seem to have come in a bit ahead of budget, and rounding accounts for the fact that the numbers don’t make prima facie sense.

ICANN said its expenses for the year came in $10 million lower than expected, at $142 million, due to lower professional services and personnel costs. Its travel expenses were $2 million more than expected, it seems due to the Washington DC meeting being more expensive than planned.

Russia cuts off ICANN funding after pro-Ukraine stance

Russia did not pay its usual annual tribute to ICANN in the Org’s fiscal 2023, newly published funding data reveals.

Coordination Center for TLD RU usually funnels $50,000 a year into ICANN’s budget, but that was reduced to nothing in the year to June 30, 2023, according to ICANN’s FY23 annual report, published today.

While it could of course be a coincidence, I rather suspect it’s retaliation for ICANN’s overt support for Ukraine following Russia’s invasion last year.

ccTLD.ru counts the Russian Ministry of Communications and Mass Media as one of its “founding members”.

ICANN donated $1 million to the Emergency Telecommunications Cluster, a relief organization, to support Ukrainians affected by the war, and gave the Ukrainian government a platform to denounce the war at a public meeting.

Later last year, ICANN also lobbied against the Russian candidate for ITU secretary general.

The .ru registry was not the only ccTLD operator to slash funding in FY23.

Belgium already said it would cut its donation from $75,000 to $25,000 in protest at “mission creep” and perceived failures to deal with privacy regulations, and the annual report shows it made good on its threat.

But it seems to have been joined by the Netherlands and Denmark, which cut their contributions respectively by $45,000 to $180,000 and by $30,800 to $30,000. Slovenia halved its donation to $5,000.

Overall, ccTLD contributions were down $176,535 to $2,214,240.

ICANN’s bean-counters probably won’t be losing any sleep over the decline; the Org’s overall funding was $150 million in the year.

Unstoppable valued at over $1 billion after huge new investment

Unstoppable Domains has received a huge new funding round that the company says means it now has a valuation in excess of $1 billion.

The $65 million Series A round was led by Pantera Capital, with a whopping 17 other venture capital firms taking part, according to the company.

Unstoppable is an alt-root player, offering blockchain-based domains in nine TLDs such as .nft, .blockchain, .crypto and .wallet.

Much of its work to date has been on persuading crypto currency users to use Unstoppable domains to replace the otherwise cumbersome and confusing addresses of their crypto wallets, but the names can also be used to address web sites if you use the right browser software.

Unlike the regular domain name industry, where much of the investment attractiveness comes from the possibility of high-margin recurring renewal revenue, Unstoppable sells its names for a one-time fee. It presumably has other revenue sources in mind for long-term growth.

The traditional domain name industry, ICANN, and potential new gTLD applicants should pay attention.

If, as seems likely, some of the TLD strings Unstoppable is using in its alt-root are applied for in the next new gTLD round, a well-funded competitor that has already proven itself litigious when it comes to name collisions could prove a formidable opponent.

Of course, some potential applicants might see a well-funded alt-root player as an invitation to apply for colliding strings in the hope of a quick pay-off at private auction.

.tech gTLD startups “raise $2 billion”

Tech startups using domain names in the .tech gTLD have raised $2 billion in venture capital financing over the last two years, according to Radix.
The registry looked at startups listed on Crunchbase as of June and found 650 companies using .tech domains. Of these, 170 of them had raised $2 billion in funding.
About 250 TLDs are in use by Crunchbase-listed startups, according to Radix.
According to a list provided by the company, funding amounts range from a modest $50,000 (obtained by the likes of the VR firm at virtualspaces.tech) to $620 million (obtained by the self-driving car company at aurora.tech).
Not every company on the list is still in business (if name resolution is any guide), and some of the .tech names bounce visitors to longer .com domains.
Meanwhile, domainer Morgan Linton has done a bit of similar research and discovered that 43% of the “top pick” startups appearing at Disrupt, the conference that like Crunchbase is owned by TechCrunch, are not using .com domains.
It’s a smaller sample size, but according to Linton, 18% of them use .io names. Most of the non-coms are on ccTLDs, in fact. The only new gTLD on his list is Google’s .app.
Disrupt made headlines in the domain world in 2010 when it launched its first conference web site on a .co domain, to coincide with the international launch of Colombia’s ccTLD by .CO Internet.
But that marketing deal lapsed after a year. Disrupt is back on techcrunch.com and disrupt.co is back in registry hands as a “premium” reserved name.
.co still appears on Linton’s list, however, so the initial partnership may still be bearing fruit.

Whois vacuum AppDetex raises $10 million

Brand protection registrar AppDetex, which counts Facebook as its key customer, has raised $10 million in funding.
It’s the second round of venture capital for the six-year-old Boise, Idaho company. This one was led by First Analysis, with first-round investors EPIC Ventures and Origin Ventures each also taking an extra piece.
AppDetex says it has raised $17.5 million to date.
The company will be best known to registrars and other DI readers for its attempts last year to vacuum up vast amounts of Whois data, post-GDPR, on behalf of mainly Facebook.
The AppDetex WHOIS Requestor System (AWRS) is a semi-automated service that streamlines the process of requesting unredacted Whois records from registrars. I was given a demo last October.
The company came in for criticism for allegedly misrepresenting the results of its initial testing of the system, using the data to lobby ICANN and to market its product.
But AppDetex is apparently not just about the domains. It also offers brand monitoring services for social media platforms, app stores and web sites.
As a registrar, the company had a little over 1,500 gTLD domains under management at the last count, so the new investment is clearly not based upon its prowess as a volume registrar but rather on its value-added managed services.
AppDetex was founded by Faisal Shah (a founder of MarkMonitor) and Chris Bura (previously of AllDomains.com) in 2012.
The company has been closely affiliated with Facebook for some time.
Back in 2016, Facebook acquired RegistrarSEC, a registrar accreditation run by Shah and Bura that at the time was actually doing business under the name “AppDetex”, in order to protect Instagram.com from a Chinese court.
AppDetex has also hired staff from Facebook, and its general counsel is married to Facebook’s head of domain strategy.
According to data Tucows released a month ago, almost two thirds of the Whois requests it received since GDPR came into effect came from Facebook and AppDetex.

OpenDNS raises $35 million

DNS service provider OpenDNS has raised $35 million in Series C funding, doubling its total raised capital to date, according to the company.
The laundry list of participating venture capitalists comprised Sequoia Capital, Greylock Partners, Sutter Hill Ventures, Glynn Capital, Cisco, Evolution Equity, Lumia Capital, Mohr Davidow Ventures, and Northgate Capital.
The company offers DNS-based security services for enterprises, such as malware and phishing detection, and content filtering for schools and universities.
CEO David Ulevitch said in a blog post that OpenDNS has over 50 million daily users. Its prices range from $28 t $42 per user per year.

Donuts “almost doubles” $100m funding for new gTLD auctions

Somebody thinks new gTLDs will be a money-spinner.
Portfolio applicant Donuts, which is involved in 307 applications, has just announced a second funding round, greatly increasing its new gTLD contention set war-chest.
(UPDATE: This article originally stated, erroneously, that the funding was to the tune of $100 million. The exact amount has not actually been disclosed. Apologies for the error.)
It follows a $100 million funding round last year.
While the new amount was not disclosed, the deal “almost doubled” its funding, according to a press release, strongly suggesting it’s of a similar amount.
Existing investor Generation Partners and new investor Columbia Partners Private Capital were both involved in the round.
The company announced its first $100 million investment last year.
CEO Paul Stahura said the money was earmarked for new gTLD contention sets, many of which will be resolved at auction, and that “Donuts has further access to additional capital should the need arise”.
In a press release, he said:

We intended from the beginning to secure the gTLDs for which we applied. We enjoy tremendous support from our stockholders and lenders. This was an oversubscribed round that nearly doubles our capacity to compete. Our investors believe as strongly as we do that new gTLDs will bring relevance and specificity to registrants who have few usable choices today for Internet identities. This additional capital supports that belief, and we intend to deploy it to bring new gTLDs to market.