If you have been following the Houston restaurant scene lately on social media, then you’ve probably seen NEXTSEED pop up on your Facebook feed. Since its inception in 2015, this crowdfunding web-based portal helmed by co-founders ABRAHAM CHU, YOUNGRO LEE and BOB DUNTON has helped to successfully fund over 25 projects, many of them located right here in Houston, raising over $7.5 million with both NextSeed TX and NextSeed US. This innovative and entrepreneurially driven concept offers individuals the opportunity to invest in local businesses, while simultaneously allowing smaller businesses the opportunity to crowd source for their startup or expansion capital. NextSeed and their team (with backgrounds ranging from finance and marketing to legal and technology) vet every project meticulously, monitoring and working closely with the project leaders on everything from marketing to business strategy. We sat down with founders Chu and Lee for a little Q & A on just what makes NextSeed tick.
HOW DOES NEXTSEED WORK?
NextSeed is a community-driven national financing and investment platform, headquartered in Houston, that allows local businesses to raise money from everyday investors in their communities. Locally, we’ve worked with Peli Peli with their expansion in Houston and Austin, and we raised capital for the launches of Chapman & Kirby and Healing Waters Float Spa (on the NextSeed Texas platform). These groups were all able to sell debt securities to the public and raise money for their projects through NextSeed. For investors, it’s like buying bonds – there’s no equity exchanged, but investors have the potential to earn financial returns through revenue sharing or fixed payments. People are investing on NextSeed because they find it a more tangible and transparent investment. We provide opportunities to invest in businesses in markets people know and understand – their own cities and neighborhoods. For business owners, it can also be a faster, more efficient fundraising process than procuring private equity investors, and allows them to keep more ownership in their businesses. But even more importantly, they get a chance to tell their story and build a group of local advocates, who can then become loyal customers.
WHAT DOES NEXTSEED LOOK FOR WHEN TAKING ON A PROJECT?
All but one of the campaigns we’ve listed have met their minimum funding goals, largely due to our objective criteria for businesses that get listed. We look for existing businesses that have proven success in their market, or new businesses from experienced owners and partners. Getting a business off the ground is not easy, and we don’t let everyone list their businesses simply because they want to. Credit checks, background checks, financial modeling and a host of other criteria are all part of our diligence process. Having said that, there’s risk with every investment, so it’s important that investors do their own diligence.
WHAT PROJECTS ARE CURRENTLY FUNDING?
At the time of this interview, we have seven deals live on our platform, four of which are in Houston: Bravery Chef Hall, a new chef-driven food hall concept opening downtown; Pitch 25, a soccer bar opening next to BBVA Compass Stadium by Dynamo legend Brian Ching; Buffbrew Taproom, part of Buffalo Bayou Brewery’s new expansion project behind Silver Street Studios: and Pokéology is expanding with a second location at Sawyer Yards. We also have projects in Dallas, San Diego and the San Francisco Bay Area currently listed.
QUITE A FEW OF NEXTSEED’S OFFERINGS TEND TO BE RESTAURANT AND HOSPITALITY, EXPERIENCE-BASED INDUSTRIES. IS THIS THE CURRENT TREND?
Absolutely. We’re offering a new investment and fundraising alternative, and we really tried to understand what people were looking for. We made a strategic decision early-on to focus on brick & mortar, experiential businesses because part of our mission is to remove the mystery and confusion that surrounds investing – we want people to invest in things they understand, feel connected to and enjoy. Food and beverage is a natural fit, as are industries like fitness, health and wellness, and hospitality. We’re trying to create a closer connection between people and the businesses around them because we believe that’s what creates stronger and more vibrant communities.
WHAT PROJECTS DO YOU HAVE ON THE HORIZON – CAN YOU GIVE US A SNEAK PEEK?
We can’t talk about upcoming projects (that’s a regulatory restriction), but we are making a conscious effort to do even more in Texas, and we’re doubling our efforts in Houston, specifically.
Our series of Next Up events will also get a refresh. Last summer, we hosted a fantastic event called Next Up: Female Founders. Traditional finance is leaving a lot of people behind, and women in particular are not receiving the support that they need. We were able to showcase some incredible women who are building awesome businesses in Houston, and it included a full-scale marketplace and a pitch event. The winners of the pitch received a year-long pop-up lease at GreenStreet, and the make(her) space just opened in November. We couldn’t be prouder of everyone involved, and we are excited to continue that for the community – in Houston and beyond.
WHAT ADVICE DO YOU HAVE FOR BUSINESSES THAT WANT TO WORK WITH NEXTSEED?
Get in touch with us! We’re passionate about small business, so if you have a project in the pipeline and think we might be able to help you raise capital while also rallying the community around you, we would love to get the conversation started.
WHAT’S NEXT FOR NEXTSEED?
This year, we will also launch version 2.0 of our tech product, which is going to be a more sophisticated web experience for our investors and issuers. We’re also planning to expand our offerings into new industries and categories, actively listening to what the community needs.
