
Mainvest – Invest in brick and mortar businesses - apsec112
https://mainvest.com/
======
OliverJones
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/](https://score.org/) before they
get in too deep. I know I'd recommend that before I made that kind of
investment.

~~~
Spooky23
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.

~~~
OliverJones
Yes, and sales tax authorities have zero tolerance for not making those
remittances. THAT's a way to fail REALLY fast involving government padlocks on
the front door.

------
SambaSambaSamba
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

~~~
rwmj
There's nothing wrong with taking an idea and trying to do it better.

~~~
SambaSambaSamba
There's a fine line between trying to improve an idea and cheap knock-offs and
stealing an ideas and identities.

Uber and Lyft are very similar, but at least they could be differentiated.
Lyft had tips at the start. The apps, sites, UX, colour scheme, etc... were
still noticeably different despite offering the same product.

Also it's a little different when you work at one company, leave, and then a
year later you copy their same product with little change and 0 attempt to
establish your own brand.

~~~
rwmj
Are you asserting that he copied code or graphics, or took existing customers
with him? If not, then there's still nothing wrong. It's competition, it's how
it works.

~~~
SambaSambaSamba
It is still worth pointing out as it is a little shady, even if it isn't
illegal.

In some ways it is similar to SlideBelt and how MissionBelt essentially stole
their product. Except in that case I believe it was a family relation and not
a professional relation.

In this case, we have businesses asking for money. What if the founders decide
they like one of the bids? They could hide/remove the bid and then steal the
business idea and use their connections, which the struggling business likely
doesn't have, to steal the idea.

Would you really trust these people?

~~~
valuearb
It’s not shady at all to copy and compete with any business. That you would
call them shady says more about you than them.

~~~
SambaSambaSamba
> That you would call them shady says more about you than them.

You may be right there. I was pretty miserable when I worked for SS and see
most things from that period in a negative light. I don't mean to sound
adversarial, but what would it be saying about me?

I think my issue here is that is feels more like a direct steal of a business
idea and less like competition. I don't see any changes, differences,
innovation, or rebranding.

It's a fine line, and everyone sees the line differently. For example, an
outsider stealing a business idea is better in my mind. They could have very
well been working on the same idea concurrently like Leibniz and Newton. They
will also have a different perspective and take on the situation. When a
previous employee steals an idea without improvement, it doesn't sit well with
me.

I think I'd be fine with it even if they just shifted focus. As a direct
improvement on SS they could say they are focusing on transparency and
security, pushing users towards 2FA and secure practices while being open with
some of the risks involved. They could focus on local small businesses within
X km or maybe some new attempt to quantify risk and match investors to
businesses based on risk profiles. They did none of that. They took the exact
same "Main Street" motif and just changed the color. Competition is good, but
cookie cutter companies like this with no innovation only hurt each other. And
then when these companies fail, everyone that that pulled in to invest and the
small businesses involved suffer.

~~~
valuearb
If you hired me to implement a great idea but you were miserable to work for,
I’d definitely consider quitting to do it on my own. I’d expect the exact same
from you, it’s an important reason to take extra care in how we lead
employees.

And there isn’t any such thing as cookie cutter companies, at least not
successful ones. When you start second you need to do something important
better, or you can never catch up.

Apple is famous for being second to market with the same idea, but with a lot
more thought and polish put into how it works.

------
drelihan
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.

------
ianmabie
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.

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...](https://medium.com/@nick_97468/our-team-is-all-white-and-its-not-ok-
fbde6e3145df)

Wish them the best of luck!

------
bananaquant
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.

~~~
chii
> 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.

------
alecco
Is it me or are most emotional appeals? I was expecting some charts or
spreadsheets showing why it would be a good investment.

~~~
ceilingcorner
‘Good investment’ also includes ‘creates a desirable urban space which
increases livability and encourages further economic development.’

This obsessive narrow focus on strict financial gains is part of the problem.

~~~
drelihan
For those looking to make a good investment to “create a desirable urban
space”, there are many ways to donate to non-profit (museums, theaters, local
schools, libraries, co-ops, etc) to achieve that. A coffee shop, or even
funeral home, could set itself up as a non-profit, with the employees and
managers making market salaries but relying on community donations, in
addition to community business, to keep the place going if needed.

For businesses who set themselves up as for-profit, or those who wish to
invest in for-profit businesses, a return on capital is required for those
systems to work. Investors may accept a lower return on their money in a local
business compared to one they will never see, but there is absolutely nothing
wrong with making sure there is a investment return. Otherwise, how do you
suppose the next business gets funded?

------
nmathews
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!
Nick@MainVest.com

------
ethhics
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.

------
cultofmetatron
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.

~~~
Xunxi
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 wasn't aware of conferences in funeral homes.

~~~
jrockway
Equity crowdfunding is always something that's sounded interesting to me on
the surface. Right now crowdfunding is just pre-ordering something with a
0.01% chance of actually getting the thing you've ordered. (I've crowdfunded 3
things in my life. All 3 things failed and I lost everything! But... this is
maybe $100 total so I'm not out too much ;)

Getting some equity in the business always made more sense to me. Sure, I want
the thing, but for the amount of risk I'm taking on, I want a percentage of
your company and future profits!

------
sgt
Do people actually expect better returns from investing in local businesses
like these (notorious for coming and going) over say the stock market?

~~~
CaptArmchair
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.

~~~
sgt
So basically it can be summed up as charity. Would that be a reasonable
analogy?

~~~
CaptArmchair
No. Not at all. It's anything but charity.

Charity would be giving money to a worthwhile cause without expecting any
direct return. You don't buy a service or a good. You just give away money to
a cause without expecting anything in return. Charity is an act of altruism.

As far as main street businesses are concerned, customers very much expect a
concrete return: a decent cup of coffee, a proper haircut, a well sewn suit,
leather shoes that don't wear out and so on. The difference between a large
franchise and a small business is the added value of being treated like the
individual, and part of the community, that you are. The altruistic part may
then be that you understand that you're supporting others in your local
community to make a living, even though you still expect a good or service in
return.

The stock market is about investing in a venture with a clear singular goal:
monetary return through speculation. It's basically a form of lending money in
hopes of gaining even more money.

That doesn't necessarily mean that speculation in itself is bad. Your
intentions are what makes all the difference. For instance, you could attach a
clear intention to your investment: because you feel that the businesses you
invest in are worthwhile i.e. your values align with the values of that
venture. This is where the whole notion of "ethical investing" comes in: you
choose to invest in ventures that "do no harm" to society and/or the
ecosystem.

Whereas, if you simply invest money in the stock market, without caring in
what types of ventures exactly, just so you can extract wealth for yourself,
well, that's where all kinds of moral questions start to pop up.

The latter is nothing new. Throughout history, immoral money lending has been
condemned an uncountable amount of times. This is what Cicero wrote about it:

> ...of whom, when inquiry was made, what was the best policy in the
> management of one's property, he answered "Good grazing." "What was next?"
> "Tolerable grazing." "What third?" "Bad grazing." "What fourth?" "Tilling."
> And when he who had interrogated him inquired, "What do you think of lending
> at usury?" Then Cato answered, "What do you think of murder?"

[https://en.wikipedia.org/wiki/Usury](https://en.wikipedia.org/wiki/Usury)

~~~
valuearb
Investing is not lending. Usury is a nebulous concept, one mans usury is
another’s lifeline. Cicero was a murdering hypocritical prig who hated
anything that would help the poor pull themselves up by their bootstraps.

------
machinehermit
Ya'll can put your money in exotic parrot stores and funeral homes. I will
stick with the Nasdaq 100.

~~~
hckr_news
What about a local deli or grocery?

------
capableweb
"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.

~~~
SambaSambaSamba
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.

~~~
gruez
>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.

So the article wants people to make a worse investment (lower ROI and/or
higher risk), and hopes that they will be okay with it because small
businesses are more relatable? Am I understanding this right?

~~~
SambaSambaSamba
It's not an article and I was making an assumption. I worked at a similar
company (with one the the founders of this place) and the idea was that
"affinity based" loans have a lower chance of defaulting. I have no idea if
the numbers back that up though. It's like a rough mix of social media and
small business lending. It's not necessarily the most financially prudent, but
I don't think it is trying to be.

