Investing in a business can be daunting, especially if you’re not someone who has a ton of money to throw at a company that may or may not make it. The benefits of diversification of your retirement portfolio (better than average returns) may not outweigh the risks that such an investment could have on your future if you’re unsure where to start. FYI, this site was formerly known as NextSeed, but it’s since rebranded to Republic Local. For discussion purposes, we will keep referring to it as NextSeed since that’s the more well-known brand.
This is where NextSeed comes in. NextSeed is a company that provides investors and small businesses with a crowdsourcing investment platform to make the investment process easier. This takes the stress and confusion out of the diversification process for investors and helps newer companies to grow and become successful. With just $100 you can begin investing like the “big guys.”
If you’re interested in this type of investment, you may want to consider this NextSeed Review.
How Does NextSeed/Republic Local Work?
When you visit NextSeed, you’ll need to create an account to begin. Once you have your account created and funded, you can then begin checking out all of the small business offerings that NextSeed has available for investors. These include local businesses, small businesses, and new startups.
Each business will have a video explaining what the business is about and why they need capital. You can then choose how you want to invest such as convertible notes, revenue sharing notes, and discounted equity agreements.
If you have more questions about a company before you invest, have no fear. NextSeed also includes further information about each company, including:
- Investment Terms
- Business Model
- Bonus Rewards
- Use of Proceeds
- Company Description
- The Team
Each investment has a minimum and maximum listed and once that maximum is reached, the opportunity to invest is closed to new investors. Some listings have a minimum of $100, while others have a minimum of $5,000 or more. There is sure to be something on NextSeed for every investor.
NextSeed Fees and Pricing
Every time you receive a payment to your NextSeed account, you will be charged a fee by NextSeed of 2 percent. This differs from traditional brokerages which will charge an asset-based fee of approximately one percent for the entire account annually. You will not be charged any fees upfront or any yearly management fees–instead, all fees you pay will depend on the returns you receive from your individual investments.
Investment Types and Limits
There are two types of investments you can make with NextSeed. These are preferred equity and debt investments. Preferred equity is similar to a dividend-paying stock where the business you’re investing in will make dividend payments to your account quarterly. This is not like traditional stocks because you will not own part of the company.
Debt investments are similar to bonds where the business will borrow funds and then make monthly payments.
The company will have an agreement to pay back the principal including interest within a specific time frame–usually with a maximum of eight years.
Please note: some of the options available are limited due to SEC regulations. For an investor to invest in some of these investments, they must meet the one of the following:
- Earn a minimum combined yearly income of $300,000 with a spouse for the previous two years with an expectation to earn a minimum $300,000 combined income this year.
- Earn a minimum of $200,000 annually for the previous two years with the expectation of earning a minimum of $200,000 this year.
- Have a minimum net worth of $1 million with personal residences excluded. Net worth can be jointly calculated with a spouse.
Also, please note: there is a maximum investment in effect every 12 months between $2,200 and $107,000.
NextSeed explains all of this on their website, so if you have further questions, you can certainly find the answers there.
Is it Risky Investing with NextSeed?
The short answer to this question is: Yes. NextSeed offers no protection for investors and you can lose part or all of your investment because your success is completely dependent on the performance of the company or companies you choose.
Remember, the money you decide to invest sits in escrow until the minimum funding goal is reached, which means that your investment sits there risk-free and will be returned to you if the minimum is not reached.
Because there is a level of risk involved in investing with NextSeed, it is important for every investor to research the companies they are contemplating choosing prior to making a final investment decision.
The Verdict on Republic Local aka NextSeed
Crowdfunding approaches to loans have really become quite popular as of late. This allows companies who may not have a chance otherwise to find investors who want to bring their dreams to life and diversify their own investment portfolios.
This is where NextSeed comes in. Of course, there is no guarantee that the business will succeed, but they boast a 90% success rate for companies to meet their fundraising goals. If you’re looking for a way to get involved in something a little different and gain capital, then I would recommend you check out NextSeed and see what businesses may inspire you.