An April 26 email sent to Nextseed investors of a Buffalo Bayou Brewing campaign indicated the investment platform issued a “notice of default” to the brewery, citing a breach of payment terms.

The Houston brewery, founded in 2011, raised $1 million on Nextseed in 2017 and 2018 for a new taproom and restaurant. In the campaign video, CEO and co-founder Rassul Zarinfar teased plans for a three-story, 35,000-square-foot facility that would increase beer distribution and guest capacity tenfold from their original location on Nolda Street.

By investing in the expansion project on Nextseed, a Houston-based crowdfunding platform, Zarinfar said fans could own a piece of Buffalo Bayou Brewing. “We make money, you make money with us,” his voiceover promised in the December 2017 video.

After some delays, BuffBrew—as the brewery is colloquially known—did end up opening the new brewery in November 2019. The sprawling complex in the Sawyer Yards area was built from the ground up, with a great view of downtown.


While the goal of the Nextseed campaign was realized, the “notice of default” email indicates BuffBrew has not kept up its end of the bargain.

“As a collateral agent on your behalf, Republic Investment Services LLC has been working with the Buffbrew Taproom team to find a path to maximize the return of capital to investors,” read the email from Nextseed’s parent company, Republic. “We are actively exploring all possibilities to find the most beneficial outcome for investors and will urge the business to provide its own updates to investors.”

When the Nextseed campaign launched in December 2017, BuffBrew offered several tiers for investors, from $100 to $25,000 and more. Lower tier perks included dollar beers on birthdays and a “mysterious BuffBrew challenge coin.” The more seed investors put in, the more they get back. The top tier earns you free beer for life (at the rate of one beer a day) and the chance to brew your own beer, among a long list of other benefits.

The key to Nextseed campaigns is the platform’s revenue-sharing program. After a certain time period (6 months or when operations begin, whichever is later), investors receive a percentage of the funded company’s monthly gross revenue as a group, doled out to each based on their initial investment until everyone is repaid in full. For a campaign that’s raised between $800,000 and $1 million, BuffBrew pays back its investors 4 percent of gross revenue in the first year and then increases the payouts to 13.5 percent from year two to six.

The Nextseed page indicates the target of $1 million was reached by 583 investors.

An April 26 email from Nextseed regarding Buffalo Bayou Brewing’s payments to investors.

Chron

One Nextseed investor, who requested anonymity, said he wasn’t surprised when he received a string of emails about missing payments between October 2021 and April of this year. After being gifted $100 from his father who encouraged him to throw it into BuffBrew’s campaign, he did so in January 2018, not really knowing how Nextseed worked.

The investor had been a big fan of the brewery at its beginnings, but stopped patronizing it when claims about harassment surfaced against Zarinfar on a service-industry whistleblower Instagram account called welp_713, which shared anonymous tips detailing bullying, verbal abuse, racist and sexist jokes , and more. (Chron has not independently verified these claims.)

For his $100 investment, the Nextseed investor received monthly payments ranging from 55 cents to $1.94 between December 2019 and September 2021, when the payments stopped. “There’s no way I make back even a quarter of the $100,” he told Chron. “I’ve made such a small investment, who cares? I’m not some millionaire.”

In total, he said he made “a cool $25.” But it was never his $100 to begin with, he added, and is not bothered with the money itself.

“It’s a little bit like karma for all the crap that had been coming out,” he said, referring to the claims made by former employees and customers on welp_713.

BuffBrew sent an email to Nextseed investors in October 2021 confirming that they were unable to make the past month’s payment and wouldn’t for the next two months. While the brewery has been able to make payments throughout the pandemic, the email cited supply chain and distribution issues as a reason for needing “short-term relief.”

In January 2022, a second email followed with more details about the issues BuffBrew faced over the past couple years, from delayed equipment to COVID-19 variants affecting the taproom’s traffic. The note claimed payments to Nextseed investors would resume in the second quarter of 2022.

The BuffBrew team could not be reached for comment at press time.

According to a Nextseed informational page, businesses that miss a payment or make a payment lower than contractually required by the next payment cycle after it’s due may be issued a notice of default, which is also sent to investors, such as the one sent to BuffBrew’s on April 26. Nextseed then works as a collateral agent for investors and takes a variety of avenues to remedy the situation, which can include helping the business refinance its debt or sell. (Nextseed could not be reached for comment.)

Nextseed notes on its site that “late payments are not necessarily taken advantage of an indication of how a business is doing,” and many other Houston restaurants, bars and more have of the Nextseed platform to crowdfund, including Cherry Block, Common Bond Garden Oaks, Roostar, Shoot the Moon, Giant Leap Coffee and Xin Chao.



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