New investment model lets Austinites join in local restaurant and bar scene
The power of the crowd has created a new normal. Did anyone imagine that one day we’d be fighting for the right to ride in a stranger’s car? Or that you’d hand over your apartment keys to someone you’ve only met online?
These days, those small personal interactions have not just become natural — we’ve grown to rely on them in our technology-filled lives. We’re connecting with people and sharing experiences in new ways.
Now small businesses are also connecting with the crowd on a deeper level than just doing business. With a new twist on crowdfunding, businesses are inviting people to participate in their financial growth, making real investments and not just donations.
When Austin’s SquareRut Kava Bar opened its first location in 2011, “relaxation drinks” were a foreign concept. The bar enjoyed early success the old-fashioned way, through a good product and stellar customer experience.
But when it came time to expand to a new location on Barton Springs Road last year, the owners decided to try something that not only got them the funds they needed, but also created advocates to help spread the word. SquareRut raised $100,000 for its next location through this new investment concept, which gave patrons an opportunity to invest in a business they could get excited about.
NextSeed is a new crowdfunding platform that makes it easy to invest funds in private businesses and start seeing financial returns quickly. Crowdfunding small businesses allows consumers to invest in the places they already love or in new concepts they want to see in their area. NextSeed’s Texas affiliate has facilitated over $1.2 million in small business investments over the past year (including SquareRut). And now NextSeed has launched nationally under brand-new federal laws, with plans to democratize investing across the country.
Several new Austin businesses are launching later this year, and they have an open invitation out to anyone who wants to be involved in their growth. A team of experienced bar and restaurant owners is creating a boutique, luxury hostel called The Native, the first of its kind in the region. Vigilante Gaming Bar is a full-service bar and restaurant that is creating a custom experience around board games. And a popular beer personality is rolling out a new craft beer and restaurant concept, The Brewer’s Table, in East Austin.
Each investment varies, but investors could start seeing monthly payments coming from their investments in as little as a few months. Investing in the community is now a real alternative to savings accounts and stocks. SquareRut has been making monthly payments to its 31 investors with an 18 percent annual interest rate. Investors also enjoy perks by using the bonus rewards they received as investors in SquareRut, and many have brought friends to try it out.
So who can invest? Anyone, now. Due to recent changes in the law, people of all income levels can come together and support business owners they believe in. NextSeed carefully reviews every deal before presenting an opportunity to investors on its website. Investors can get information about each deal and choose which business they want to connect with and help grow.
Austin business owner Jenna Choe launched a campaign on NextSeed’s Texas platform earlier this year for the popular Jenna’s Asian Kitchen in Cedar Park. She raised $75,000 from investors to install a bar in her established restaurant.
Her investors didn’t need deep pockets to contribute — investments started at $100. By offering smaller portions of the pie, she was able to make it easier for everyone to get a piece. And giving her investors VIP perks such as gift cards and party invitations also allowed her to connect with the community that had already supported the restaurant over the past year.
For NextSeed co-founder and CTO Bob Dunton, the secret to Jenna’s success and satisfaction with crowdfunding is the community.
Dunton says, “Instead of just borrowing from an institution that only cares about getting a monthly payment, Jenna was able to invite people from the community to invest and feel a sense of bond and commitment to her business and her success.”
Although NextSeed is new, community financing harkens back to a more down-to-earth approach to building a business that was much more common before big banks took over. Now Austinites are empowered to invest a range of dollar amounts to boost local bars, restaurants, salons, and other places they are passionate about.
For more information on this new crowdfunding platform, and to see which of your favorite businesses have active campaigns, visit NextSeed.
Any views expressed in this article reflect the personal views of the author only for discussion purposes and should not be viewed as investment advice or recommendation, and does not constitute any legal or tax advice with respect to any securities.