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Mainvest

Invest in small businesses across America to support a more vibrant local economy.

Mainvest makes it easy to generate passive income by investing in small businesses across America. With as little as $100, you can invest in vetted companies and receive a share of their revenue as they grow, with target returns of 10% to 25% on your investment. It's an excellent way to support local businesses and diversify your portfolio.

Let's take a closer look at Mainvest, why you might want to consider investing through the platform, and some tips to keep in mind.

Who is Mainvest?


Felix Le Dem, Ben Blieden, and Nick Mathews co-founded Mainvest in 2018 to connect everyday investors with small businesses that don't have access to Wall Street or venture capital financing to get them off the ground. The team brings a wide range of experience from tech companies like Uber and Google and the financial sector (Mr. Blieden has a CFA).

The company aims to help communities control their local economic development and share in the wealth it creates. In addition to helping small businesses fight against national competition, the platform funds female and minority entrepreneurs less likely to be approved for conventional small business loans.

So far, businesses have raised over $100 million on Mainvest through the support of more than 10,000 investors with a 96%+ repayment rate. These deals include everything from neighborhood bakeries to breweries and everything in-between, and they're typically structured as a revenue-sharing agreement with a set maturity date.

How Mainvest Works


The investments on Mainvest are made under Section 4(a)(6) of the Securities Act of 1933—or Regulation CF Crowdfunding. Unlike many other private investments, you don't have to be an accredited investor with $200,000+ in income or $1 million in liquid net worth to participate—the platform is open to anyone.

Here's how it works: Small businesses apply to raise capital on the platform. Mainvest looks at their financial statements, owner background, and other factors. Once approved, investors can invest as little as $100 for a share of future revenue up to a certain point, such as 1.5x their original investment. It's a win-win for everyone involved!

For example, suppose that a baker wants to raise $20,000 to open a bakery storefront. An investor might invest $100 in the business. Once the baker starts generating revenue, 5% of the total revenue would pay back investors until the investor receives $150—a 50% return. Once investors are paid back, the baker keeps 100% of their revenue to themselves.

Investors might use Mainvest as a way to diversify their investment portfolio or put their long-term savings to work. For instance, you may dedicate a speculative portion of your investment portfolio to crowdfunding or set aside a few hundred dollars each month to support businesses on the platform as a way to grow your savings.

Risks to Keep in Mind


Mainvest vets businesses to protect against fraud, but these investments aren't risk-free—there's always a chance of loss. The best way to mitigate the impact of these losses is to diversify your investments across a range of different businesses. You should also avoid investing money that you cannot afford to lose, as these investments are riskier than others.

The company does vet companies in several ways:

  • Responsibility Check - Mainvest interacts with the business owner through phone calls and emails to prepare documents. They look out for warning signs in the process, such as a lack of communication or missing financials.
  • Bad Actor Check - Mainvest conducts a limited background check through a reputable third party for any 20%+ beneficial business owners looking for liens, lawsuits, or other red flags.
  • Yellow Flag Check - Mainvest looks at everything from traffic tickets to lawsuits and reviews them on a case by case basis to determine if it's a potential investor concern.
  • Continuous Review - Mainvest continuously reviews any additional information as it becomes available to determine if it's a risk for investors.

In addition, Mainvest requires social underwriting, meaning that businesses must raise at least $10,000 from ten people they know personally. The company believes that these kinds of social underwriting provide better returns and few defaults since business owners are accountable to their network, as well as other investors.

The Bottom Line


Mainvest is a mature platform that enables you to support local businesses and achieve attractive returns. By leveling the playing field for women and minority entrepreneurs, the platform also addresses inequalities and promotes a more inclusive world. As a result, investors may want to consider it as a way to diversify and make an impact.

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Dec 08, 2022

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Asset Class

Crowdfunding

Impact Focus

Small Business

Tags

entrepreneurs small business

Highlights

  • Invest in small businesses across America for as little as $100.
  • Receive a share of the business' revenue that grows as it does.