by: jouko ahvenainen

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.

75% of the membership fee goes to the community fundInstead 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.


Learn More About Grow VC Group Companies

Crowd Valley, Startup Commons, ChangeLab23, Kapipal, Grow Advisors, TradeUp Fund, Startup Crowdfunding, Crowdbaron, Crowd Index Fund, Commoditarian, Hatch PR

We are always looking for talented, entrepreneurial and driven doers to join our growing global group of companies in various positions and locations around the world. If you think you have what it takes, apply now!


Other posts you may enjoy

About the author

jouko ahvenainen Jouko Ahvenainen is a serial-entrepreneur, e.g. co-founder of Grow VC Group, a pioneer in new funding solutions, including equity p2p investments. He participated in changing US finance regulation, getting the Senate and President to allow crowdfunding and has worked with EU finance regulation. Jouko started his work with crowdfunding models in 2008. Jouko has been listed Top 100 Influencer in Digital Industry and Top 100 Of The Most Influential Thought Leaders In Crowdfunding.

Tags: ,

This entry was posted on Monday, August 9th, 2010 at 12:34 pm and is filed under Business Education, Private investors, Startup Investors. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.