Summary: Our model has several components and we have noticed that there have been misunderstandings about our commission. Of the membership fee, we keep 25% to run our operations – but it doesn’t mean we have 25% commission. It would be a skyrocket high commission, no way. Instead of keeping whole membership fee as our revenue, we use 75% of the membership fees for community fund investments, so it goes to startups, and community members decide, how it is invested. We then reward members for these selections, if the investments are good. When a member has paid the fee, the one with funder role (investors) can then make direct investment without any commission and entrepreneurs can raise money to their startup without any commission. To clarify; there are no traditional commission, only the membership fee. We made some calculations to see an effective cost per investment level by using the 25% of the membership fee as a fixed fee. You can see the results in the table below. The first three cases are for monthly membership, i.e. if an investor or entrepreneur make or get the full investment in a month, the last two cases for a year. Fee Investment cap To Community fund Effective fee Effective cost per investment Remarks $110.00 $500,000 $82.50 $27.50 0.01% for montly investments $30.00 $50,000 $22.50 $7.50 0.01% for montly investments $20.00 $25,000 $15.00 $5.00 0.02% for montly investments $950.00 $50,000 $712.50 $237.50 0.47% for annual investments $400.00 $100,000 $300.00 $100.00 0.10% for annual investments As you can see, the effective costs are always less than 0.5%. Of course, if an investor or entrepreneur doesn’t use the full amount, the effective cost is higher. But that’s why we have those steps that everyone can find her or his right level and pay an optimal membership fee. Grow VC is really a costs effective model to make and look for investments. We also work to find standard models for investment agreements, due diligence and other needed services, to keep those costs down too. The Grow VC model is cost effective compared to any investment service, but especially the costs structure is totally different from the traditional VC model. Our aim is really to create an effective market for startup funding. Startups and investors need it. Update: You can also read the related blog post about our model in full detail and listen for related audio below.
