Have you ever wanted to invest in a local small business but didn't know how? Now you can with Mainvest.
Mainvest is an investment marketplace connecting investors with vetted SMBs. We allow small businesses to secure flexible capital from community investors while giving retail investors access to previously inaccessible investment opportunities.
"Mainvest is reshaping the landscape of small business financing one Main Street at a time."
Mainvest believes that communities should control their local economic development and share in the wealth it creates.
National retail chains and e-commerce giants are replacing family-owned, brick & mortar businesses. Big banks on Wall Street are denying a majority of the small business loan applications they receive. Those from female and minority entrepreneurs are less likely to be approved. Meanwhile, real estate developers profit as they rebuild communities instead of those who live there.
This needs to change.
Communities should decide which entrepreneurs get the capital they need to reshape their Main Streets. And members of the community should reap financial rewards when they invest in the entrepreneurs who succeed.
How you can invest in local businesses through Mainvest
Small businesses like restaurants, breweries, and retail shops work with Mainvest to raise flexible working capital, typically on better terms than a bank. Investors work with Mainvest to discover, support and invest in these small businesses.
With targeted annualized returns of 10 to 20%, quarterly repayment schedules, and low minimums, it's easy to start building a localized portfolio, whether you're an experienced investor or a novice. "Mainvest was built to align incentives so that in a community when businesses succeed, everybody succeeds."
It's really easy to get started. All you have to do is create an account, link a payment method, review the terms on the offering or offerings that you're interested in, invest and ideally over time, receive your repayments.
Now that you understand the basics of Mainvest, let's talk about the revenue sharing note. The revenue sharing note is a debt instrument that entitles you to a share of a business's sales or top line revenue until you receive your initial investment, plus a return.
It's almost like a royalty or a microloan, but instead of using an interest rate, it uses a revenue share percent. The revenue share percent is the percentage, or share of revenue, that a business will use to repay investors. Each quarter, a business will report to Mainvest how much revenue they made in the prior quarter. We'll calculate the amount that will be repaid to investors, and then distribute each investor's proportional share.
The other elements of the revenue sharing note to understand is the investment multiple. This dictates the total amount that you're owed by the maturity date. For example, if you invest $100 into a business with a 1.5x, multiple, your total return should be $150. If a business does really well in these projections, it is possible that you'll be repaid early.
However, if the business fails to repay the full amount by the maturity date, they will remain in default. In this situation, investors are able to take actions as outlined in the note agreement. Bear in mind that Mainvest does not guarantee returns.
How does Mainvest vet businesses?
Mainvest has a responsibility to ensure that businesses do not raise investor protection concerns - here's how we determine who is eligible to raise on the platform.
Anti-Fraud Vetting
Per the regulations, Mainvest must have a reasonable belief that each business that launches on the platform does not raise a risk of fraud or otherwise raise an investor protection concern. This does NOT mean that offerings are free of risk, or that mainvest or any other entity endorses or recommends a particular investment, only that the offering and business owners behind it appear capable of managing investor funds and are not disqualified from conducting an offering under Regulation Crowdfunding.
Responsibility Check
The first step in the review process is for Mainvest staff to interact with the business owner through phone calls, emails, and assisting with preparation of documents. Mainvest staff look out for potential warning signs. Examples that can result in Mainvest denying a launch may include a lack of communication, missing or rounded financials, or concerning social media activity.
Bad Actor Check
Once the offering is reviewed by Mainvest staff, the next step is to go through what is called a "Bad Actor Check" or "BAC." The BAC is a limited background check, conducted through a reputable third party, of a business, its managers and officers, and any beneficial owner of more than 20% in the business. The BAC primarily focuses on regulatory disqualification provisions, which automatically bar an issuer from raising under Regulation Crowdfunding - a "Red Flag". The BAC can also shows other publicly filed information, such as liens or lawsuits, that could impact a business operations - a "Yellow Flag".
Yellow Flag BAC's
Yellow Flag BAC's can range from traffic tickets to lawsuits and so are reviewed on a case by case basis to determine if the report is accurate or if the flag raises an ongoing investor protection concern. Based on the compliance team's review, an offering may be prevented from launching, allowed to go forward with additional disclosures, or allowed to go forward with no changes.
Continuous Review
Once an offering is launched, Mainvest continues to review any additional information as it becomes available, and reviews any negative information to determine if there is an investor protection concern or risk of fraud. While every offering contains risk, Mainvest's staff works diligently to make sure that each offering's risks are properly disclosed.
Discover vetted businesses in a new asset class and build a portfolio fit for you.
Commentaires