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Commentary from Mike Porteous

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DO NOT PAY A “SUCCESS FEE ON DOLLARS RAISED”

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The situation

The seed and A round space have many participants who all claim to be able to connect you with the right institutional investor. Most if not all have high engagement fees for the creation of marketing materials–we have seen anywhere from $7500 to $20,000 CAD
Certainly, most also charge a success fee anywhere from 3%-7% on dollars raised even though they are not a registrant in every US state
Almost everyone cannot directly point to “tombstones”or many deals closed.
IN FACT, THEY ARE ALL IN THE BUSINESS OF COLLECTING UP-FRONT ENGAGEMENT FEES.
 

Nextround is different

We asked a sample of 500 companies at the seed and A round stage what kind of fee structure they could be comfortable with. We also did some base line calculations on what business model would allow us to thrive and continuously improve our service.
Our basic costs are almost entirely associated with data gathering thesis information on investors and our time in vetting prospective clients. We have automated the matching making process (thats why there is an AI at the end of our name).
A perfect world would be no engagement fee and only a success fee.
Registering as a broker dealer in all 50 states costs approximately $250,000/year
 
No firm to our knowledge with a success only business model has ever survived given that the aggregate funding rate of seed and A rounds is less that 4%

Compromise

An engagement fee that does not divert resources from building your business but does not give your board cause for concern and only covers our most basic costs.

A success fee that isn’t a success fee in terms of the regulatory environment but rewards NEXTROUND and incentivizes us to get you into due diligence with a family office and/or VC.

The goal is for us to set up a call between you and the investor.

What is it worth to you to get into to due diligence with an Investor?

We do the outreach and follow-ups and schedule calls.

The method of our madness

In 2023 we are only accepting between 50 and 100 clients at a $999 set-up fee and $1000 per call that results in a term sheet. Obviously, we will only generate between $100,000 and $150,000 in 2023.
 
This will simply cover our costs. The goal is to generate a number of tombstones. By December 2023 we hope to prove that Next Round is capable of actually getting companies funded. 
In 2024, we will change the business model, instead of charging a fee that leads to a term sheet, we will require our clients to grant us the right to purchase 1% of their company at a strike price 100% above pre-money valuation for 5 years.
 
This option will be granted upon engagement. If we are successful in getting you funded during our engagement we keep the option. If we are unsuccessful the client will revoke the option.

OUR GOAL IS TO BUILD A PORTFOLIO OF 1% STAKES IN EVERY COMPANY WE HELP GET FUNDED.

How it works

1. Submit Your Deck

Let's meet and learn about each other between the two of us we can figure out if NextRound is right for you.

2. Review

After the call with Mike, please send us your deck. Your deck will be reviewed by Mike our CEO and the entire advisory board and NeoTerra Capital. All on a confidential basis of course. We will determine if:
1. We have a suitable audience for you within our database and network
2. If the stage and/or nature of your business causes us to fear that some members of our audience may unsubscribe
3. If your deal is fundable in our opinion by a VC or Family office

3. Outreach

Our Partner, Daniella Tedesco, will meet with you to collaborate on the creation of an ultra-brief and blunt outreach message.
Then the curated target target group receives this message over the phone and via Linkedin and by email on a scheduled basis. Any and all investor responses are dealt with and automatically forwarded to you to keep you in the loop.

1. Book a Call

Tell us about your business and yourself. Provide us with details such as sector, stage, ip, and send us a non confidential deck.

Submit your Deck

2. Research

Next we scrub our data base of over 15,000 institutional investors that operate at Seed, and Series A stage - if we can not find enough investors that match you we will tell you and recommend you do not sign up.

3. Connect

We write a teaser email for you. Then we reach out to the names we have discovered for you they get a teaser email and the deck you provide.

Michael
Porteous

Frank
McGillicuddy

Christopher
Piedmonte

Stephanie
Weier

Adel
Haddad

Daniella
Tedesco

Our Team

Advisory Board

These valued partners constitute our advisory board. Their role is to help us identify opportunities and curate potential investors.

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Partnership

Questions you
might have

Need more help? Contact Us.

Just press the button, SUBMIT YOUR DECK, and fill out the form to qualify your company. We will review to matchmaking your deal with our Investor database and reach out back to you with the results.

Yes, we have references upon request and some will be posted on the website.

Yes. $499 USD/month 3 months MINIMUM. At the 90 day mark clients can extend on a month to month basis at $499/month for up to an additional 3 months

  • An option to buy 1% at a strike price of 125% of post-money valuation.
  • At the 6-month mark, both parties can mutually agree to continue working at zero cost to pursue the 1%.
  • If funding is not secured, the 1% option fee will be returned.

You don’t. This business is done on a best efforts basis.

The subscription is not refundable and you can stop the campaign your deal anytime.

Our business model is simply

Pay us for a scheduled call with an investor that results in a mutual NDA being signed (Due Diligence)

  • NO success fees
  • A simple subscription model
  • Blunt and simple messaging and follow up
  • You are buying our experience and knowledge
  • Totally transparent process
  • 100 investors contacts at a time
  • Stop campaign anytime

Before you sign up we tell you the scope of investors available and if the number is too small we will likely suggest you stick to do-it-yourself and go after Angels in your community

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