Product Overview of Mainvest
What is Mainvest?
Mainvest is a crowdfunding platform designed to connect everyday investors with small businesses across the United States, enabling investors to support local economic growth and earn passive income. Founded in 2018 by Felix Le Dem, Ben Blieden, and Nick Mathews, Mainvest aims to democratize access to capital for small businesses, particularly those led by women and minority entrepreneurs who often face challenges in securing traditional financing.
Key Features and Functionality
Investment Opportunities
Mainvest offers investors the chance to invest in a diverse range of small businesses, including restaurants, breweries, bakeries, beauty salons, and more. These investments are structured as Revenue Sharing Notes (RSNs), which are a form of debt that gets repaid based on the business’s revenue performance.
Low Minimum Investment
Investors can start with as little as $100, making it accessible to both accredited and non-accredited investors. This low barrier to entry allows a broader range of people to participate in supporting local businesses.
Revenue Sharing Model
Investments on Mainvest are repaid through a revenue-sharing model. For example, a business might share 5% of its revenue with investors each quarter until a predefined multiple of the initial investment is reached (e.g., 1.5x the original investment). This model aligns the repayment with the business’s actual revenue performance, potentially allowing for faster repayment if the business outperforms expectations.
Vetting Process
Mainvest employs a rigorous vetting process to minimize investment risk. This includes:
- Responsibility Check: Ensuring business owners are prepared and can communicate effectively.
- Bad Actor Check: Conducting background checks on business owners and key stakeholders.
- Continuous Review: Ongoing monitoring of businesses to prevent fraud and risk.
Transparency and Information
Investors have access to detailed information about each business through a data room, which includes:
- SEC Filings
- Business Plans
- Financial Forecasts
- Risk Factors
This transparency helps investors make informed decisions about their investments.
High Target Returns
Mainvest investments offer target returns ranging from 10% to 25%, making them an attractive option for those seeking higher returns compared to traditional savings or investment vehicles.
Social Responsibility
Mainvest emphasizes social responsibility by requiring businesses to raise at least $10,000 from 10 people they know personally before listing on the platform. This approach helps build trust and ensures that business owners have a strong support network, contributing to a reported repayment rate of over 96%.
Illiquidity
It’s important to note that investments on Mainvest are illiquid, meaning investors are committed to their investment until the maturity date. There is no secondary marketplace for selling these securities, and transfers or early withdrawals are not permitted.
Benefits
- Support Local Economy: Investors can contribute to the growth of local businesses, helping to build more vibrant communities.
- Diversification: Mainvest offers a unique asset class that can help diversify investment portfolios.
- Passive Income: Investors can earn passive income through the revenue-sharing model.
- Accessibility: Open to both accredited and non-accredited investors with a low minimum investment requirement.
Overall, Mainvest provides a platform for everyday investors to support small businesses while potentially earning attractive returns, making it an innovative and socially responsible investment option.