The first anniversary of Regulation Crowdfunding just passed not long ago. Equity crowdfunding and debt crowdfunding are the two main investment types, and we at NextSeed have rounded up the numbers under our domain of debt crowdfunding.
In the first year of the new rules, 100% of all offerings listed on NextSeed were funded, and NextSeed led the industry in the number and overall volume of debt offerings. NextSeeders invested $2,537,900 into 11 local businesses around the country, the third highest total amount raised across all platforms.
But we’d rather focus on the metrics that matter: how successful were NextSeed businesses and NextSeed investors?
We were excited to see these businesses open since they successfully raised funds:
- The Native opened an experiential upscale hostel in Austin
- Vigilante Gaming Bar opened a board-gaming bar and restaurant in Austin
- The Sugar Refinery opened a speakeasy restaurant in Sugar Land
- Citizen Pilates opened its second location in Houston
- Rambler opened an upscale Americana restaurant/bar opened to much popularity in San Francisco
We’re anticipating many other NextSeed-funded businesses opening and renovating:
- The Brewer’s Table, a beer-focused restaurant and brewery in Austin
- The Annex HTX (formerly The Co-op HTX), a coworking space in Houston
- Cinco TacoBar’s second location in the East Bay
- Intero Ristorante, a whole-animal, whole-produce Italian restaurant in East Austin
- PORTERS, an upscale restaurant and butchery in College Station
- Red Diamond Yoga’s expansion of their boutique studio space in Los Angeles
Unlike other investment crowdfunding platforms out there, we don’t do equity crowdfunding for tech startups. In fact, we are the only platform that focuses our attention and expertise solely on debt financing. We strongly believe that by connecting brick-and-mortar businesses and individuals through solid debt investment opportunities, we can build vibrant communities and stimulate our local economies.
Whether a business is seeking funding for a small or large portion of their project, NextSeed evaluates each business. We apply standard metrics to advise the business on the appropriate offering size and terms, taking into account the business’s demonstration of its ability to meet debt service coverage requirements and its overall funding needs.
The shortest average number of days to close across all fundraising platforms is 55 days, on NextSeed. Brick-and-mortar businesses cannot have extraordinarily long fundraising periods if they’re on a timeline to open. That’s why we work with businesses to launch their offering at the right time.
On the investor side, as of June 2017, NextSeed businesses that raised under Reg CF have repaid investors $106,865.50. And NextSeed businesses from both the old Texas intrastate platform and the current Reg CF platform have paid $778,174.06 back to investors since 2015.
Although there were some unfortunate delays in new business openings, there hasn’t been a single default (for businesses financed through revenue sharing loans, payments are due when the business begins generating revenues).
Here are the annualized returns for each business that has started payments as of June 2017:
|Term Loans||Net Annualized Return (NAR)¹||Amount paid as of June 2017|
|The Snoring Center* (payments completed)||11.16%||$110,109.10|
|Square Rut Kava Bar*||19%||$58,342.20|
|Jenna’s Asian Kitchen*||16.53%||$42,695.24|
|Peli Peli (payments completed)*||16.82%||$409,511.97|
|Vigilante Gaming Bar||19.07%||$34,758.27|
|Revenue Sharing Loans||Net Annualized Return (NAR)¹||Amount paid as of June 2017|
|Hair Revolution* (payments completed)||7.29%||$26,250.00|
|Chapman and Kirby*||15.08%||$2,783.49|
|The Sugar Refinery||15.51%||$6,643.79|
*Funded on NextSeed Texas
Funded deals that have not begun payments: Healing Waters, The Brewer’s Table, The Co-Op HTX, Cinco TacoBar, Intero Ristorante, PORTERS, Red Diamond Yoga and Oakland Rec Club
With that being said, we are not, and never want to be, a pure investment platform where money is the only thing that matters. Instead, we strive to develop a small business ecosystem that can be valuable to everyone in our network. Our mission is to connect businesses and individuals to build vibrant communities, and everything we do as a company is intended to further this mission. We’re excited to see that our growing base of members are getting more familiar with this new concept of investing and coming back to invest in more deals. We truly believe that investment crowdfunding can fundamentally disrupt old, inefficient financing and investment systems, and we’ll continue to do our part to push forward.
¹NextSeed strives to provide a fair and reasonable measure of investors’ current investment performance, updated on a monthly basis in conjunction with the latest cash payments made by businesses. For this purpose, we are utilizing the concept of Net Annualized Return (NAR) to measure the current financial return on each investment in your portfolio. Generally speaking, with respect to a particular investment, NAR is an annualized measure of the rate of return on the principal invested over the life of such investment, calculated based on actual cash payments received each month, net of service fees, actual write-offs and actual recoveries. NAR is not a forward-looking projection of the performance of any investment, and reflects the full principal value of such investment until and unless such investment is written off. For additional details about how NAR is calculated, please refer to the following: https://www.nextseed.com/about/faq/#investor-investment-return-calculations
NOTE: The information provided in this article is provided for informational purposes only. NextSeed does not provide any investment advice or recommendation. Investing in securities involves risks, and investment returns are not guaranteed. You should not invest in a crowdfunding offering unless you can afford to lose the entire investment.