MainVest On Bringing Everyday Investors To Main Street Shops

There are all kinds of startups that set out with a big goal in mind — disrupting an ecosystem; remaking the way people buy, sell and pay; hitting reset in healthcare and even changing the entire world as we know it. Big plans generally required big investments — which is why the best-known startup firms in the world have big names in business and venture capital standing behind them with their big checkbooks as backers.

But not every entrepreneur in the world has a big idea. In fact the vast majority of small firms in the U.S. have much simpler goals than bringing to market an epoch-making innovation. Chef Rachel Miller in Lynn, Massachusetts wants to convert her Nightshade Pop-Up into a permanently located restaurant that specializes in noodle and Vietnamese- and Viet-Cajun-influenced foods. Chef Keenan Langlois, who has worked in or helped found 50 restaurants over the course of his career, is looking to open an upscale, casual, quick-serve deli and cafe in a section of Salem, Massachusetts that he describes as a bit of a “food desert.”

Neither entrepreneur is hoping to disrupt the world with noodles or sandwiches — but both would very much like a chance at disrupting Main Street in their respective towns.

The problem is that finding investors for Main Street businesses outside of immediate friends and family is nearly impossible for most first-time entrepreneurs, even if, like Langlois and Miller, one comes with a pre-built fanbase, long experience and a strong track record in selling goods.

And that is where Nick Mathews, co-founder and CEO of MainVest, is hoping his newly-launched startup can carve out a place for itself: helping the kinds of Main Street businesses — think cafes, coffee shops, car washes, restaurants and beauty salons — that do not typically have any way of attracting investors.

MainVest, in short, is designed to be the platform that can help local people meet and invest in these entrepreneurs and their up-and-coming ideas.

How It Works

To be part of MainVest, business apply and are vetted by the service. If accepted, the small business sets up an “offering” on the platform, where it essentially pitches its concept to the local community — and the wider digital world. Consumers who are interested can then send funds.

If it sounds a bit like Kickstarter or other crowdfunding sites, it should. Mathews noted that the concept is intended to be similar.

The difference, he explained, is what those funds are at base; they aren’t gifts or donations, they are investments into the business itself. MainVest, he explained, works directly with entrepreneurs to streamline the regulatory process and set up their offerings to allow for capital raises that accomplish long-term business goals. If the business succeeds, the investors get their investment back; and then some (depending on the terms laid out in the offering by the entrepreneur).

“This was designed around changes in federal regulation that made it possible for non-accredited to participate in  small businesses to equity crowdfunding by SMBs,” Mathews said. “Anyone can invest, you don’t have to be wealthy or meet a certain criteria.”

Investments, he noted, can be as little as $100.

Once an offering is up on the site, the entrepreneur behind it must set a minimum the campaign needs to raise, a maximum amount it is willing to raise from investors and a time limit on how long the attempted fundraising is going to last. If the offering does not attract enough participants, the funds are returned to investors.

Why It Will Work

Local citizen already have a way to “invest” in their local businesses, of course — by patronizing them and spending their dollars within their walls.  But Mathews believes that giving a consumers a way to literally be invested in local shops actually provides bigger benefits to both sides of the equation than mere patronage alone.

There is risk involved for those small investors, he noted, as Main Street businesses often struggle, particularly in their early days, but risk of losing an investment is the main risk of investing funds in any arena.

Moreover,  MainVest is premised on the idea that if a businesses has local stakeholders, it will be able to achieve a much higher success rate. Because people in the community aren’t just visiting because they think it is nice to support a local business, but because they have actual skin in the game.

And as for the merchants themselves, Mathews believes his firm could provide a significant improvement in access to the investor market, particularly for groups like for women and minority entrepreneurs who often find it hard to find investments along typical funding channels.

“We believe people should be able to make a living doing what they love,” he said. “Unfortunately, access to capital is a primary factor limiting growth in the small business sector.”