Discover local businesses, review their business plans and financial statements, chat with the owners, and invest with as little as $100. With Mainvest you invest with revenue sharing notes. Businesses agree to share a percentage of their revenue each quarter in exchange for investment. Revenue is shared until investors receive their target return. If investors haven’t received this amount by the maturity date, the remaining amount is owed to them as a balloon payment.
How you make money
Businesses agree to share a percentage of their revenue each quarter in exchange for investment. Revenue is shared until investors receive their investment multiple. If investors haven’t received this amount by the maturity date, the remaining amount is owed to them as a balloon payment.
How Mainvest makes money
Mainvest doesn’t charge investors any fees, but does charge issuers a percentage of the amount raised (typically 6%). Investors should understand this reduces the amount of capital the business actually receives for operations.
Is it safe?
Mainvest has received an A+ rating on the Better Business Bureau website, and has been the subject of zero consumer complaints on the site. To date, they have raised $3 million from 5 investment partners in a seed round of funding.
They are diligent in making sure that offerings on the platform do not raise investor protection concerns. Once an investment 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". 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.
If investors haven't received their target return on investment by the maturity date, one of two things will happen:
- Balloon payment: In this scenario, the business would pay their investors the amount remaining towards the target return on investment. For example, if you invest $100 in a business that is offering a target return on investment of 50% and you have only received $125 dollars of shared revenue by the maturity date, the business may provide you with a balloon payment of $25.
- Remain in default: If the business does not provide a balloon payment, they will remain in default. Interest will accrue and compound on the amount owed. Investors (or a representative they agree upon) could pursue legal action to force repayment or bankruptcy. Mainvest does not pursue legal action on behalf of investors. Investing in private businesses involves risk. It is possible that you would not receive payments from the business in this scenario.