How does Next Step Capital PartnersTM differ from a typical Venture Capitalist firm or Private Equity Investor?
Next Step Capital PartnersTM is the only Central Texas investment firm that provides funding on a share of revenue basis. Investments are not collateralized, there are no equity sale requirements. Investment contracts are structured so that repayment is sourced solely from an agreed-to percentage of topline revenue and capped per mutual agreement. Given a shared objective of topline revenue growth – as opposed to positioning for IPO or strategic acquisition – there is no need for difficult front-end valuation processes.
How is Next Step Capital PartnersTM different from debt financing?
Banks and other lenders require a set payment schedule irrespective of company performance. Next Step Capital PartnersTM investments are repaid solely on the basis of topline revenue. If sales trend lower than expected, payments decrease proportionately. If sales are higher than anticipated, the investment is repaid early.
Lenders also require hard assets or other personal guarantees to collateralize a loan. Next Step Capital Partners‘TM revenue-sharing investment structure eliminates these requirements.
How is Next Step Capital PartnersTM different from venture debt?
Just like bank financing, venture debt requires fixed payments, collateralization of hard assets, and other personal guarantees. Also, venture debt typically requires an ownership stake in the company. Next Step Capital PartnersTM has none of these requirements.
How does Next Step Capital PartnersTM due-diligence process differ from that of Private Equity Investors or Venture Capitalists?
Next Step Capital Partners’TM due-diligence process is thorough yet more focused than other sources of investment capital. Analysis is focused solely on the company’s ability to generate sustainable revenue and gross margin to cover the investment while allowing the company to thrive. Since positioning for IPO or strategic acquisition is not the objective of investment – and therefore no need to evaluate the potential for this type of outcome – analysis is dramatically simplified.
At what stage does Next Step Capital PartnersTM invest?
Next Step Capital PartnersTM is focused on companies with a marketable product or that are close to launch with a proven revenue model in place. Investments are typically utilized for operational objectives including but not exclusive to new product launches, sales expansion, working capital for inventory and/or receivables.
How is a typical Next Step Capital PartnersTM investment structured?
In return for an investment, an agreed-to percentage of future revenue is paid to Next Step Capital PartnersTM until the investment is repaid, inclusive of an agreed-to return. Determination of the total amount to be paid is based on the timing and certainty of payment amounts and other risk factors.
Does Next Step Capital PartnersTM invest in companies outside of Texas?
At this time, Next Step Capital PartnersTM is primarily focusing its investment efforts on companies based in the state of Texas. In the future, Next Step Capital PartnersTM expects to broaden its geographic scope of operations and begin investing in companies outside of the state.
In what types of companies does Next Step Capital PartnersTM typically invest?
Next Step Capital PartnersTM does not limit its investments to any industry or specific market segment. However, given the size and structure of its investments – $250,000 to $2,000,000 repaid from a percentage of topline revenue – Next Step Capital Partners™ is not a fit for companies that require large or long-term infusions of capital.
What is the process for securing funding from Next Step Capital PartnersTM? How long does it take?
The first step toward securing an investment from Next Step Capital PartnersTM is to submit an Investment Application. Requests for funding absent a completed application cannot be considered.
Applications are reviewed within one week. Assuming an interest in moving forward, Next Step Capital PartnersTM will notify the requestor and provide an outline of the evaluation process and expected time-frame.
Next Step Capital PartnersTM has the ability to move rapidly, having previously funded companies within a few short weeks of receiving a completed application.
What happens if company revenue projections are off and payments to Next Step Capital PartnersTM cannot be made as anticipated?
Firm founders Dan Keelan and Patrick Drew are highly experienced entrepreneurs, business executives and investors who understand the uncertainty of revenue forecasting. Next Step Capital PartnersTM investments are structured to accommodate variability, as repayment amounts track with topline revenue. As sales increase, the size of payments increase (and the investment is repaid faster). If sales are lower than anticipated, the size of payments decrease proportionately. The length of the investment period will therefore vary accordingly.
Apart from its unique investment structure, what separates Next Step Capital PartnersTM from other investors?
Next Step Capital PartnersTM is uniquely qualified to manage an early-stage investment fund. Firm founders Dan Keelan and Patrick Drew have been active investors, advisors and operators of a wide variety of business concerns. Dan and Patrick both understand and can appreciate things from an entrepreneur’s point of view. With key expertise in sales execution, and more than a combined four decades of it, Next Step Capital PartnersTM is a perfect fit for companies seeking to expand topline revenue.
How large a fund does Next Step Capital PartnersTM have available to investment?
Next Step Capital PartnersTM has sufficient capital committed to invest in 10-15 companies over the next 12-18 months. The firm also welcomes co-investors where appropriate, which could significantly expand the number and scope of investments that we make.
How does Next Step Capital PartnersTM work with lenders, angels, venture capitalists and other investors?
Next Step Capital PartnersTM compliments rather than replaces other types of growth capital. The firm anticipates many early-stage companies may use the investment to position themselves for a future equity investment that is appropriate and beneficial (i.e., not overly dilutive). Next Step Capital PartnersTM welcomes co-investors of all types.
What role does Next Step Capital PartnersTM expect to take in exchange for its investment?
None. The structure of a Next Step Capital PartnersTM investment, as a percentage share of topline revenue, eliminates the need for the firm to assume a management position within the company. The firm’s approach is completely non-intrusive and does not require a Board seat or other formal role. Dan Keelan and Patrick Drew are, however, always available to assist management when requested, bringing a wealth of hands-on sales, operations and start-up expertise to the table.