When Common Bond’s CEO George Joseph started planning for his newest drive-through concept at 3210 N. Shepherd Dr., his landlord, Revive Development, shared information about a unique funding model. Houston-based NextSeed, a micro investment platform, started five years ago when a change in the law allowed a crowdfunding model for capital investment.
Investors can invest – either with an individual account, an investment entity or a new self-directed IRA – as little as $200 and as much as $107,000 to a curated selection of pre-vetted businesses. The NextSeed website states that just 3 percent of applicants are approved to launch an offering on the platform.
“Common Bond is a perfect fit for NextSeed, and for Garden Oaks,” Revive’s Monica Danna said. “A known, local business choosing to expand into our neighborhood is a great opportunity for residents to take part in the growth of our community.”
Although for his five previous restaurants Joseph used more traditional methods of financing, he said he was sold on the idea of using NextSeed for a portion of the funding on the Garden Oaks project to garner awareness and support in the neighborhood.
In a video on his NextSeed offerings page, Joseph said investors who contribute to the $100,000 goal would fund the renovation of the former Kim’s Service Station into the second on-the-go concept for Common Bond. The first is at 601 Heights Blvd. There is also a Common Bond Bistro & Bakery in the Waterworks development at 449 W. 19th St., Ste #B-100.
One of the garage bays will be the drive-through with pickup around back. Joseph said in the video that the inside of the auto repair shop will be converted into “a great café bistro feeling with a large patio.”
The interest rate is 14 percent, paid back within 48 months. Joseph said he thinks of the generous return as part of his marketing budget.
Investors also get a T-shirt, name recognition in the restaurant and an invitation to the grand opening party. And as Joseph tells investors, they “become a member of the Common Bond family.”
Abe Chu, co-founder of NextSeed, said when it got started it worked mostly with brick-and-mortar businesses, and in 2019 when the company obtained a broker-dealer license it began to branch out to other categories like tech startups, consumer-packaged goods and commercial real estate projects. Still, the tangible nature of the “main street” type businesses is a big driver of local engagement in local businesses.
“We’ve worked with a number of businesses in hospitality, and people love to invest in places they can visit and enjoy,” Chu said.
NextSeed became acquainted with Revive through their successful applicants who were also adding value to Revive’s developments.
“(Revive) is a great example of a creative and engaged developer that really understands the neighborhood they’re working in,” Chu said.
Joseph has been working on the offering with NextSeed for a few months and said the company has been very involved from the beginning.
Chu said NextSeed handles everything from legal filings to campaign drafts to creative review without getting paid. That only comes when the applicant meets their goal. There are about five to 10 campaigns going at a time, which allows the company to spend the requisite time to help manage it. To date, more than 90 percent of campaigns launched on NextSeed have met their fundraising goals.
“The platform is built around helping communities invest in themselves,” Chu said. “They can be a part of the growth.”
A local resident who has been happy with her NextSeed experience is Citizen Pilates owner Jess Hughes. She said she raised $100,000 in 2016 from 75 investors through NextSeed’s regulated crowdfunding for her second location. This week Hughes paid them back in full.
“My experience with NextSeed’s team was exceptional,” she said. “I appreciated their due diligence process to vet business owners but was even more impressed with the turnkey product they provided. They handled all marketing aspects of my campaign, communication with investors, regulatory paperwork and payouts over the past four years.”
Joseph said he is excited to open early next year.
“I used to drive by this building and think that something really cool could happen with it,” he said.
Danna said if investors are secured through the operator, using its link, the operator gets a discount from NextSeed on its fee versus NextSeed procuring the investors.
“We want to incentivize companies to get their supporters and communities engaged,” Chu said.
Visit http://nextseed.com/commonbond for more information.