Raise Capital To Grow Your Business
There are a variety of different ways to raise capital and grow your business, one of these models is known as the partners for life strategy, also referred to as the GPS Model. GPS stands for the Growth Partnership Model, also known as the Seth Model. This model is used to grow from one partner to multiple over generations.
The Seth Model
JT Foxx uses this method to create lifelong investors and named this model after his first investor, Seth. It is powerful because it creates synergy between a working partner and a money partner. This mode allows both partners to grow large and quickly. Many businesses want more money to grow, and this model allows for that.
1st generation
Seth starts with $250,000 cash and a 50/50 ownership split, but the money invested runs out. The profits generated are currently split 50/50 with JT and Seth.
2nd generation
Next Seth brings in a larger investor for a 2 million dollar investment, with this Seth gets 10% with no one invested. JT gets 50% and does all the work, and the new investor gets 40% and provides all the capital.
3rd Generation
The latest partner brings in the next investor - 20 million - Seth gets 3% and the previous partner gets 7%. This new partner, 20 million, gets 40% and brings all cash, JT gets 50% once again.
4th generation
The newest partner brings a new partner, the new partner brings 200,000 million. The previous 20 million partner gets 15% because he brought in such a valuable partner, 40% goes to JT, 2.5% to Seth, the 2 million dollar investors also get 2.5%, and 40% goes to this new 200,000 million partner.
Why Is It Effective?
Seth's model is very effective because it rewards every single person who is connected with JT and this makes pre-existing partners happy to refer others because they continue to make money even after their own investment runs out.
People with money know people with money. This also allowed for JT to enter social circles that he previously never had access to. In life, it's not what you know but it's who you know that counts, the main reason why networking is so valuable and important in the business world. In Seth's model, it's always the responsibility of the latest partner to attract the new partner with bigger pockets. This allows the pool of money to grow exponentially and everybody involved in the investment wins. Partners from previous generations cannot add more money later on, because then it will steal profits from all future partners and intercept their gains.
Loyalty is the most important part of this model. It's better to have a smaller number of partnerships that are for life, rather than a lot for the short term. Many short-term partnerships require a lot of communication and effort to maintain. It's better to have lifetime partners, and important to reward them generously when they contribute to your business growth. Keeping clients on for longer is beneficial to both partners involved.
Credit to Money, People, Deal by Stefan Aarnio for source information.
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