NextSeed Review

NextSeed Review

Many people dream of investing in a successful business. Not only does this achieve portfolio diversification, but you can also receive better than average returns by investing in a quickly growing company in the initial stages.

This is the reason NextSeed was created. The company provides small businesses and investors with a crowdfunding investment platform. Once you make an investment in a small business, you simply wait for the capital to grow.

NextSeed offers you opportunities previously available to just wealthy investors. The idea is similar to logging into a broker investment account to find stocks you want to invest in.

Once you open an account with NextSeed, you can browse small business listings requiring capital. These small businesses are trying to raise a specific amount of money. As an investor, you can make a contribution as low as $100.

This concept is referred to as crowdfunding with a process much like peer-to-peer lending platforms.

How Does NextSeed Work?

NextSeed offers you multiple investments accounts. As an investor, you can open a self-directed IRA account, an investment entity account or an individual account. You can start browsing investment opportunities once your account is open and funded.

NextSeed Review

The majority of investment opportunities are looking for additional business capital. This includes:

  • Local businesses
  • Small businesses
  • New startups

Each investment opportunity includes a video explaining why capital is necessary and the business itself. You can choose from different debt financing and investments including:

  • Discounted equity agreements
  • Revenue sharing notes
  • Convertible notes
NextSeed Review

You will see a clearly detailed company and listing for every investment opportunity including:

  • Investment Terms
  • Business Model
  • Bonus Rewards
  • Use of Proceeds
  • Documents
  • Highlights
  • Gallery
  • Company Description
  • History
  • Comments
  • Updates
  • The Team

There is an offering maximum and offering minimum for every investment regarding funding. To ensure a deal, the minimum investment is required. Once the maximum is reached, the deal is no longer available to new investors.

You can find offerings with a minimum investment of $100, while the minimum for others is $5,000 or more.

Pricing and Fees

Every time a payment is made to your account by a business, you will be charged a fee of two percent by NextSeed. The majority of traditional brokerages charge an asset-based fee annually of approximately one percent for the entire account.

We want you to realize if you receive a large payment from a company, the two percent fee can add up quickly. The way NextSeed functions is different than a traditional brokerage.

You will not be charged any fees upfront or yearly management fees. The fees you pay depend on the returns you receive from individual investors.

NextSeed Review

Signing Up for NextSeed

To sign up, simply follow the steps below.

Visit the official website.

Click on Sign Up.

Create your account with a password and username.

Complete your registration with a six-digit verification code.

Verify your identity by providing the following personal information.

  • Name
  • Phone number
  • Address
  • Social Security number

Select the type of account.

Browse the investment options.

Once you determine where you want to contribute, click on Invest.

To make your investment, enter your routing and bank account numbers.

Investment Types and Limits

NextSeed Review

NextSeed offers two main investment types, preferred equity and debt investments. Preferred equity is similar to a dividend-paying stock. The business you are investing in makes dividend payments quarterly to your account.

This is different than stocks since you do not own part of the company. Debt investments are similar to bonds. The business borrows funds, then provides monthly payments.

The company has an agreement to pay back the principal including interest in a specific time frame. This is usually a maximum of eight years. You can also make an investment in industrial, commercial and residential real estate.

Some of the options available on NextSeed have been limited to accredited investors due to SEC regulations. Federal securities law mandates the investments these investors can purchase. One of the following must be met by accredited investors.

  • 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 e1xcluded. Net worth can be jointly calculated with a spouse.

According to federal securities law, there are limits imposed on regulated crowdfunding investments. This is what is offered by NextSeed. An investment of $2,200 can be made by anyone for crowdfunding investments within 12 months.

The maximum investment is $107,000. You can calculate your maximum in two different ways. The first is if your yearly wages or net worth are below $107,000. You simply multiply the lower amount by five percent.

If below $2,200, your maximum investment is $2,200. If above $2,200, the maximum is your result. The second option is if your earnings or net worth are above $107,000. Your maximum investment is 10 percent of your net worth or income.

The lower amount of the two is applicable. You can choose among self-directed IRAs, investment entities and individual accounts.

Pros and Cons


Pros

  • NextSeed will not charge you any upfront or yearly management fees or commissions like you would pay with other brokerages.
  • You have the opportunity to invest in alternate assets including real estate, small businesses and startups.
  • You are not required to be an accredited investor. All investors are provided with options available to only accredited investors in the past such as preferred equity and debt investments.

Cons

  • You receive an investment platform from NextSeed as opposed to direct investment advice. We recommend conducting research and analyzing the available options prior to making an investment.
  • Depending on the startup or local business you choose, your investment may be high risk.
  • There is a maximum investment in effect every 12 months between $2,200 and $107,000.

Is Investing with NextSeed Risky?

You do not receive any specific protection from NextSeed. This means if you are not careful which company you choose, you can lose part or all of the investment. Your return is dependant on the business performance.

NextSeed Review

Some companies have not opened yet, while others do not have a proven track record. Analyzing the position of the company and the risk level prior to investing significantly improves your chance of selecting a winner.

There is no risk until you have actually made an investment. According to the official website, the funds contributed to any business on the platform are placed into escrow until the minimum funding goal is reached.

Your money will not be invested until this time. If the minimum goal is not met by the company, you receive a refund of your funds in your NextSeed account. This remains true whether the company is trying to reach $50,000 or a million.

Although there are no average returns listed on the NextSeed website for investment options, you will find helpful information regarding the company on the menu. A few good examples are:

  • Company business model
  • Specific highlights
  • Management team

We still recommend conducting research on the individual businesses including finances prior to making a final decision.

Bottom Line

NextSeed offers a crowdfunding approach to company loans, essentially doubling as a marketing opportunity. Both potential customers and advocates with a vested interest in the success of the business are enlisted.

This ensures raising community engagement and capital is more efficient. No personal guarantee is required from any of the businesses including new concepts. Although there is no guarantee the company will succeed, past performance is important.

According to NextSeed, 90 percent of all campaigns featured have reached their fundraising goals. If you are interested in receiving capital from this type of investment, NextSeed is well worth your consideration.

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