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Mainvest – Invest in brick and mortar businesses (mainvest.com)
46 points by apsec112 17 days ago | hide | past | favorite | 59 comments

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.

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.

Yeah, but revenue figures are much harder to manipulate than "profits"...

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

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

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.

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.

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?

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.

> 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.

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.

Even if it’s more than just a little shady, people are free to do as they please as long as it’s legal. The law is the law.

Not really sure what you propose they do about it?

I wasn't proposing anything. I still think it is worth shedding light on shady practices so people are at least aware.

Just because something is define in law does not make it right or wrong. All we can really do is inform people and let them decide for themselves.

Shady is relative. I don’t think many see anything wrong here.

Your personal bias may be clouding your judgement.

Speak for yourself.

I think it's a worthwhile data point that the creators of Mainvest couldn't be bothered to come up with a different layout for their landing page and took it verbatim from their former employer.

It helps me make the decision of using their investment platform or not. Where else did they take shortcuts?

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.

Yeah its likely. The moment I saw the Mainvest homepage I was reminded of the SS homepage when I was there. It looks like there have been changes since.

I assumed a founder or one of the employees was the one to post the link. I was genuinely curious to see how they are different. SS did a lot of things wrong, and there was a lot of room for improvement, but at a glance this place looks the same.

edit: After re-reading the original comment, I guess the "blatant ripoff" line was a bit rough. I probably should have used some softer language

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.

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!

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.

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

‘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.

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?

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

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 wasn't aware of conferences in funeral homes.

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!

Neither am I, but I imagine that's part of the overall vision, that this isn't to be a stuffy funeral home of old, but a new fancy-pants one where you can look at art, rent out rooms, and such, in addition to honouring the dead.

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

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.

There are lots of tiny public companies with dubious finances and wild plans. I mean, you've heard of the S&P 500, right, that has companies like Starbucks that you associate with Wall Street? There's on the order of 5,000 US public companies, maybe more, which means 90% are small companies you've never heard of. The majority of them sound pretty scammy, but so does the funeral home mentioned in this thread. It sounds like a "blank check" company and there are a lot of those you can buy via any discount broker like Robinhood.

It’s an investment in the same sense that American Express is investing in me.

I invested in an associates coffee shop. A pool of people invested for 60% of the business, with the founder earning additional share for hitting milestones and getting the opportunity to buyout.

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

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?"


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.

Thanks for the elaborate explanation and thoughts. It does make sense.

I had a friend who contacted me recently, and sent me a blockchain startup “to review”

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

Agreed. And I suppose that's okay to some extent, one just has to be very careful with your investments and maybe not exceed 10% for experiments like those.

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...

Another perspective is that by simply going to these cafés and drinking coffee (even if it's just a takeaway during the pandemic), you are supporting them financially. If a business is healthy and not wasteful (which many are), that should be sufficient.

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

What about a local deli or grocery?

"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.

>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?

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.

I had no idea it was a generic term, and searching for it didn't cross my mind. Thanks! Guess my previous comment can be ignored as I don't seem to be the in target market either.

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.

Is just a name, but you are really investing in a single store. Like a coffee shop. But investing in retail now have a lot of risks

Apparently it's not just a name but a specific name that (every?) US cities has for their street where it's mostly businesses located. Don't think we have any equivalent in Europa, closes would be the main plazas I guess.

For what it's worth, though almost every North American city I've visited has a Main street, and all of them appear to have small businesses on them, they are often not the street with the most small businesses. For example, in Toronto, there is a Main Street, but it's a North-South route north from The Beaches, rather than downtown, so King St. and Queen St, which are East-West, naturally have far more small businesses because they run through more of the downtown.

Sorry if my comment was unclear, I didn't want imply that Main Street is the street with "most small businesses" but that Main Street itself consists "mostly of small businesses", compared to streets with residencies or mixed usage.

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.

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