Ever wish that you could be an investor in small businesses like a Venture Capital fund, or perhaps like the popular show Shark Tank? Not only would it be a great way to diversify your portfolio, but it would give you the opportunity to have above average returns with fast growing companies in their initial stages.
This is exactly what NextSeed was built for. They are a crowdfunding investment platform for investors and small businesses. With NextSeed, you can start investing in small businesses looking for capital to grow.
They open up the opportunities that were traditionally only available to wealthy investors to be able to invest in companies you love from an early stage.
Is NextSeed worth pursuing? Is it a risky investment? Or are there better alternatives? All this and more in this NextSeed crowdfunding review.
What Is NextSeed?
Much like logging into your investment broker account and searching for stocks to invest in, NextSeed lets you open an account to brows listings of small businesses in need of capital.
Small businesses can seek to raise a stated amount of money, and investors can contribute to the funding with as little as just $100.
This concept is known as crowdfunding, and the process is very similar to common peer-to-peer lending platforms such as Prosper or Lending Club.
How Does NextSeed Work?
NextSeed has multiple investment accounts available that you can open as an investor. You can open an individual account, an Investment Entity account, or a Self-Directed IRA account.
After opening your account and funding it with at least $100, you can begin browsing the different investment opportunities available. Most investment opportunities will include local businesses, new startups raising funds and matured small businesses seeking additional capital. Each investment opportunity has a video to explain their business and their need for capital.
Investments include different types of debt financing such as convertible notes, revenue sharing notes, or discounted equity agreements (aka S.A.F.E. agreements) for example.
Each investment opportunity clearly details its listing and company. Details for each listing include:
- Investment Terms
- Use of Proceeds
- Company Description
- Business Model
- The Team
- Bonus Rewards
…and other related descriptions of the business and investment opportunity.
Each investment has an “offering minimum” and an “offering maximum” for funding. The minimum is the amount required for the deal to go through, and the maximum is the amount where the deal is closed off to new investors.
Some offerings will require only $100 minimum investments and others will require $5,000 or more as the minimum investment.
Can You Make Money With NextSeed?
Whether you make money or not with NextSeed depends entirely on doing your due diligence on each investment you contribute money to.
If you're looking to invest in a food trucks company for example, then you will need to thoroughly vet the business offering, visit their website, see what their customers are saying, discover how much they have been growing and get an overall strong sense of the likelihood of that company growing and thriving.
If you've found a great opportunity that is offering a discounted equity agreement that lets you receive a 20% discount on the equity valuation when the company is bought or listed on the stock market, you have an opportunity to turn a little investment into a great lump sum!
With that said, keep in mind that the higher the risk, the higher the reward. You are investing in small businesses that could just as easily take a turn for the worst and you lose your money.
The best chances at making money with NextSeed lies in investing in multiple companies. The ones that end up being winners usually end up winning big, and the losers usually end up losing quickly.
Where NextSeed Falls Short
With NextSeed being a fairly new company (founded in 2014), there are certainly a few things that may make or break your decision to investing with them.
Limited Investment Options
When I opened up my NextSeed account and began browsing their investment options, I was surprised to find only five available investment opportunities. FIVE!
(See image below. These were the investments available at the time of this writing and may change over time.)
Furthermore, one of the five options had already reached its max investment making it closed to more investors and one of the opportunities had a $5,000 minimum investment amount.
Based on the number of investments under their “Successfully Funded Campaigns” section, I counted about 66 funded opportunities.
What does this all spell out? Your investment options are extremely limited to say the least, and not all offerings end up meeting the minimum investment amount which results in the deal never going through and your investment being sent back to you.
Heavily Focused in Texas
The company is based out of Austin, TX and as a result has a heavy focus on local businesses within the state of Texas.
This isn't necessarily a bad thing but expanding their geographical presence would make NextSeed a more personalized investment platform allowing people from other states to invest in companies within their local town.
Limited Info On Financial Statements
As a stock market investor, I rely on the financial statements of a company when making an investment decision. When researching a new company to invest in, there are only a handful of stated numbers and related charts to spell out their company financial stability.
Before making an investment decision, I prefer (and I'm willing to bet most investors will agree) to have a thorough understanding of their finances.
NextSeed Competitors / Alternatives
As an alternative option to investing with NextSeed, I'd recommend either searching for another crowdfunding platform, or stick to investing in great companies that are publicly listed on the stock markets.
Consider the following NextSeed Alternatives:
Want to stick to the stock market? I recommend opening an account with one of the following companies: