It takes a lot of self-confidence for a small business person to issue revenue notes. They aren't profit notes; they come off the top line not the bottom line. So if the business goes through a cycle of loss-making this kind of debt can turn into a way to "fail fast." Then everybody loses.
Hopefully a small business considering this kind of loan can get some free advice from somebody like https://score.org/ before they get in too deep. I know I'd recommend that before I made that kind of investment.
Good point. The people who need this are the people least able to handle it.
Many sole proprietor businesses get in trouble with sales tax collections when they try to juggle accounts with cash flow problems. Adding a loan product like this... ouch.
Looks like the revenue shares are small percentage wise, although I guess many of them aren't high margin businesses either. Of course it also looks like some of the businesses are forecasting short term losses bigger than their current fundraising ask.
I used to work with your co-founder Felix. The idea isn't bad, but this feels like a direct copy of the company where we worked, StreetShares. They had the exact same "Main Street" theme an overused it a bit. The "About" page used to list the employees' favourite main street in their synopses. Even the homepage is surprising similar. The main difference seems to be the stock photos.
So are there any differences in your product and SS? I assume the tech stack is much better. SS made me want to vomit. I guess this is an SS clone without the military focus? SS wasn't an original idea either, but at least they tried to put a spin on it. This just feels like blatant rip off
Has StreetShares maybe pivoted a bit since you worked there? I'm looking at their website now, and it looks like they sell bonds and then invest the funds in veteran-owned businesses, so it seems like investors aren't directly exposed to any individual business. Honestly I don't see much in common with Mainvest, either in design or concept.
If StreetShares used to look like Mainvest but changed their model, and Felix believed in the original idea and decided to quit and try it again, what's wrong with that? It's like the Vine founders starting Byte, or the Screenhero founders starting Screen. Not only is copying ideas a core part of capitalism, but it barely even counts as copying when it's an idea you yourself worked on.
Was expecting more info on how repayment works thru the revenue sharing notes - not clear what percentage of revenue a business is agreeing to pay or how much teeth these notes actually have. I would expect most of these “investments” to end in a almost complete write downs. Could be a great funding alternative if the details / investor protections were fleshed out. I personally would not touch any of these until then.
I know Nick, Bob, and Strader from early Uber Boston days - they are great people and very hard workers. I'm really happy to see ex-Uber folks going after an opportunity to strengthen local communities vs. so many others who tried to hop on the next scooter / marketplace / fintech 'rocketship'
I don't know enough about the investment model they support, but any company that is trying to help grow important community businesses like Great Scott in Allston deserves attention.
At first I misread the name as "Malinvest". Funny enough, the website is set up to encourage exactly that.
You have to pick a business based on a short description and some social media profiles. Some of the listings have a business plan or a slide deck, but none present an audited financial statement.
Then there is a mysterious metric called "investment multiple". It seems to be a 6.5-year ROI. When you break it down, it boils down to 3.5-8.5% return per year on the money you lend them. However, the payment schedule is unspecified, and it is not exactly clear what recourse do you have if things go under. A bank would never provide a business loan on such terms.
> A bank would never provide a business loan on such terms.
and that's why this is trying to find retail investors to invest. Good investment deals are almost never public, and will always be taken by those close to the deal.
We built MainVest to allow small businesses to raise capital from their community and let people vote with their wallet to drive economic growth, while getting potential returns priced on average in the 10%-20% IRR range. One of the largest drivers of success on the platform is the social underwriting that goes into successfully funded campaigns, resulting in the asset class to date performing well, even against what would be fair to call the largest existential threat to small business in most of our lifetimes.
We're happy to answer any questions people may have about the small business landscape and how these investments are structured and can perform. Reach out! [email protected]
This is an excellent idea, though perhaps too much like crowdfunding. There’s an early bird bonus that bumps your ROC—for instance, helping float a parrot store through COVID as one of the first X dollars can push me from 30% to 50% returns (both over 7 years).
Also, considering the uptick in cases over the past week, the timing of investing in small businesses seems suspect.
with you know what on everyone's minds, I'm interested in investing in the funeral home on the front page. Seems like a pretty stable place to put one's money regardless.
You should do what you want with your money, but it is wise to do your research:
- It was founded in September 2019, but has not even acquired a lease on a suitable location yet.
- The presentation states they will use the money raised to take over an existing funeral home, but the "risks" section in the data room says it "is a newly established entity and has no history for prospective investors to consider." If they are taking over an existing funeral home, surely the numbers from that funeral home would be available.
- Later on in the presentation slides on the first place, they state that the funeral home they are looking to take over has about 200k revenue forecasted for FY2020. On the data room "financial forecasts" section projected revenue for year 1 is almost double that at 380-390k. Also despite the funeral home presumably existing for some time already, they think they'll be able to grow revenues almost 50% in 2-3 years.
- The president has over 20 years experience in death care which is nice. The vice president seems to be his wife and is currently working as a dental assistant.
- The risks include that they might not have sufficient accounting controls in place (!). You won't even know if they are doing well or not.
- They offer "guaranteed" (provided they still exist in 2026) return of $1800 on 1/1/2026 on $1000 invested. That is an annualized ROI of more than 11%. That they are offering interest rates this high means that all the providers of lower interest rates have rejected them. A highly speculative startup in electric scooters here in Amsterdam recently offered 8% and that was more than enough to get enough interested investors. You should ask yourself why they are offering such high interest rates and what it means for the (perceived by the market) chances of them not existing in 2026 to pay back your money.
To summarize: there are a number of "red flags" that warrant extreme caution.
Non accredited investments or equity crowdfunding is very risky. Do your your diligence before you part with your money.
I also thought this was weird, "Mizen will also showcase local art, host a weekly support group for veterans, and offer conference rooms to be used by local nonprofits."
I think there's a vast difference in what you expert from Wall Street compared to Main Street.
Investing in a portfolio and watching a candles comes with one very singular yet very clear expectation. Those candles moving in ways that's favourable to you and yielding an unrefined monetary return.
Investing in Main Street? You would do that for a multitude of very different reasons or personal reasons. For instance, that coffee place down town is where you meet up with your friends, or you have fond memories of that place because you met your spouse there a decade ago. The value of a funeral parlour would be that the entire local community, at one point or another, will get into touch with them. Hairdresser? Corona forces me to do my hair at home, but as soon as I can, I'll go back to my hairdresser where you'd have the banter and the relaxing atmosphere while you get treated.
So, the idea of investing in new main street businesses isn't because they fulfil a simple, crude financial return. It would be because you expect them to flourish and add a wide range of intangible values and a unique identity to a local community, which you'd be hard pressed to find in one-size-fit-all chains of stores and services.
Put more succinctly, sure, you could invest in Starbucks on the stock market. But if you've been to one of their venues, you've pretty much seen them all. Which is the opposite for an independent coffee place where the owner went out on a limb to add their own unique touches and has build up their own specific clientele.
Looking at the selection of businesses and the badges, I think they're going more for the feelgood factor of supporting trendy cafes and arts projects.
Looking at the actual figures, a typical opportunity offers a capped 30-50% ROI owed within seven years, which is in the ballpark of average stock returns before you start to consider the businesses which can't repay. You can do better if a business exceeds revenue targets and repays early, but you're not exactly at the front of the creditor queue when they're underperforming...
"Invest in Main Street, not Wall Street." doesn't really tell me anything. Why would I be interested to only invest in business located at one street in some city in the US? Wall Street I understand to be the "business/finance" neighborhood of the US, is Main Street something similar to that but for "normal" businesses?
Seems like a weird tagline, but could also be that I'm missing something as I don't live in the US.
I think "Main Street" is referring to small businesses, which are usually outside of ordinary people's reach when it comes to investing, since most business investing is limited to "accredited investors".
Small business lending is an interesting space. Small business often fail and thus small business loans tend to have garbage rates. I'm assuming the idea is to hit people on an emotional level, allowing 'investment' into someone that you can relate with as opposed to some large corporation.
It's a common idiom in American politics. It was pretty cliche to contrast Wall St and Main St (finance industry and rest of the economy) during the 2008 crisis.
It all depends on ROI. Perhaps these small businesses will give more return if they can get seed money to get started. It's an interesting business model for sure. Similar to Lending Club but for small businesses.
[+] [-] OliverJones|5 years ago|reply
Hopefully a small business considering this kind of loan can get some free advice from somebody like https://score.org/ before they get in too deep. I know I'd recommend that before I made that kind of investment.
[+] [-] Spooky23|5 years ago|reply
Many sole proprietor businesses get in trouble with sales tax collections when they try to juggle accounts with cash flow problems. Adding a loan product like this... ouch.
[+] [-] LatteLazy|5 years ago|reply
[+] [-] notahacker|5 years ago|reply
[+] [-] SambaSambaSamba|5 years ago|reply
So are there any differences in your product and SS? I assume the tech stack is much better. SS made me want to vomit. I guess this is an SS clone without the military focus? SS wasn't an original idea either, but at least they tried to put a spin on it. This just feels like blatant rip off
[+] [-] rwmj|5 years ago|reply
[+] [-] burkaman|5 years ago|reply
If StreetShares used to look like Mainvest but changed their model, and Felix believed in the original idea and decided to quit and try it again, what's wrong with that? It's like the Vine founders starting Byte, or the Screenhero founders starting Screen. Not only is copying ideas a core part of capitalism, but it barely even counts as copying when it's an idea you yourself worked on.
[+] [-] drelihan|5 years ago|reply
[+] [-] ianmabie|5 years ago|reply
I don't know enough about the investment model they support, but any company that is trying to help grow important community businesses like Great Scott in Allston deserves attention.
I also thought Nick's message on internal diversity was one of the better takes (blunt & honest) I'd seen from a CEO: https://medium.com/@nick_97468/our-team-is-all-white-and-its...
Wish them the best of luck!
[+] [-] bananaquant|5 years ago|reply
You have to pick a business based on a short description and some social media profiles. Some of the listings have a business plan or a slide deck, but none present an audited financial statement.
Then there is a mysterious metric called "investment multiple". It seems to be a 6.5-year ROI. When you break it down, it boils down to 3.5-8.5% return per year on the money you lend them. However, the payment schedule is unspecified, and it is not exactly clear what recourse do you have if things go under. A bank would never provide a business loan on such terms.
[+] [-] chii|5 years ago|reply
and that's why this is trying to find retail investors to invest. Good investment deals are almost never public, and will always be taken by those close to the deal.
[+] [-] alecco|5 years ago|reply
[+] [-] ceilingcorner|5 years ago|reply
This obsessive narrow focus on strict financial gains is part of the problem.
[+] [-] nmathews|5 years ago|reply
We're happy to answer any questions people may have about the small business landscape and how these investments are structured and can perform. Reach out! [email protected]
[+] [-] ethhics|5 years ago|reply
Also, considering the uptick in cases over the past week, the timing of investing in small businesses seems suspect.
[+] [-] cultofmetatron|5 years ago|reply
[+] [-] WJW|5 years ago|reply
- It was founded in September 2019, but has not even acquired a lease on a suitable location yet.
- The presentation states they will use the money raised to take over an existing funeral home, but the "risks" section in the data room says it "is a newly established entity and has no history for prospective investors to consider." If they are taking over an existing funeral home, surely the numbers from that funeral home would be available.
- Later on in the presentation slides on the first place, they state that the funeral home they are looking to take over has about 200k revenue forecasted for FY2020. On the data room "financial forecasts" section projected revenue for year 1 is almost double that at 380-390k. Also despite the funeral home presumably existing for some time already, they think they'll be able to grow revenues almost 50% in 2-3 years.
- The president has over 20 years experience in death care which is nice. The vice president seems to be his wife and is currently working as a dental assistant.
- The risks include that they might not have sufficient accounting controls in place (!). You won't even know if they are doing well or not.
- They offer "guaranteed" (provided they still exist in 2026) return of $1800 on 1/1/2026 on $1000 invested. That is an annualized ROI of more than 11%. That they are offering interest rates this high means that all the providers of lower interest rates have rejected them. A highly speculative startup in electric scooters here in Amsterdam recently offered 8% and that was more than enough to get enough interested investors. You should ask yourself why they are offering such high interest rates and what it means for the (perceived by the market) chances of them not existing in 2026 to pay back your money.
To summarize: there are a number of "red flags" that warrant extreme caution.
[+] [-] Xunxi|5 years ago|reply
I also thought this was weird, "Mizen will also showcase local art, host a weekly support group for veterans, and offer conference rooms to be used by local nonprofits."
I wasn't aware of conferences in funeral homes.
[+] [-] sgt|5 years ago|reply
[+] [-] CaptArmchair|5 years ago|reply
Investing in a portfolio and watching a candles comes with one very singular yet very clear expectation. Those candles moving in ways that's favourable to you and yielding an unrefined monetary return.
Investing in Main Street? You would do that for a multitude of very different reasons or personal reasons. For instance, that coffee place down town is where you meet up with your friends, or you have fond memories of that place because you met your spouse there a decade ago. The value of a funeral parlour would be that the entire local community, at one point or another, will get into touch with them. Hairdresser? Corona forces me to do my hair at home, but as soon as I can, I'll go back to my hairdresser where you'd have the banter and the relaxing atmosphere while you get treated.
So, the idea of investing in new main street businesses isn't because they fulfil a simple, crude financial return. It would be because you expect them to flourish and add a wide range of intangible values and a unique identity to a local community, which you'd be hard pressed to find in one-size-fit-all chains of stores and services.
Put more succinctly, sure, you could invest in Starbucks on the stock market. But if you've been to one of their venues, you've pretty much seen them all. Which is the opposite for an independent coffee place where the owner went out on a limb to add their own unique touches and has build up their own specific clientele.
[+] [-] malux85|5 years ago|reply
I said - did you buy these because it was a friend of yours, or do you expect them to increase in value over time? Or some other reason?
She said “I don’t know why I purchased these, I purchased them without understanding it”
Sooooooo there’s your answer. The level of analysis that average people do on investments is near zero or zero
[+] [-] notahacker|5 years ago|reply
Looking at the actual figures, a typical opportunity offers a capped 30-50% ROI owed within seven years, which is in the ballpark of average stock returns before you start to consider the businesses which can't repay. You can do better if a business exceeds revenue targets and repays early, but you're not exactly at the front of the creditor queue when they're underperforming...
[+] [-] machinehermit|5 years ago|reply
[+] [-] hckr_news|5 years ago|reply
[+] [-] capableweb|5 years ago|reply
Seems like a weird tagline, but could also be that I'm missing something as I don't live in the US.
[+] [-] SambaSambaSamba|5 years ago|reply
Small business lending is an interesting space. Small business often fail and thus small business loans tend to have garbage rates. I'm assuming the idea is to hit people on an emotional level, allowing 'investment' into someone that you can relate with as opposed to some large corporation.
[+] [-] delibes|5 years ago|reply
[+] [-] qntty|5 years ago|reply
[+] [-] m3kw9|5 years ago|reply
[+] [-] larrydag|5 years ago|reply