The cannabis industry is a difficult one to start a business in, especially for mom-and-pop shops and social equity applicants. However, Mainvest is aiming to change the landscape by welcoming marijuana businesses of all sizes to raise capital in the form of investment from their community.
So, what is Mainvest? Mainvest is a regulation crowdfunding platform that allows non-accredited investors to crowdfund small, brick-and-mortar enterprises thanks to Title III of the JOBS Act. Before this legislation passed, only accredited investors—with a net worth in excess of $1 million—were allowed to invest in private companies. Now, the platform allows anyone with a bank account to invest in cannabis with as little as $100.
Mainvest assists small companies to compete against big retail chains and has seen a significant increase in interest from cannabis enterprises in recent months. CEO Nick Mathews notes the platform differs from other sources of funding in that, “We enable capital access from the community to give cannabis entrepreneurs competing against large private equity and venture-funded conglomerates a path to fund and grow their enterprise.” Before adding cannabis to the repertoire, Mainvest has and continues to work with Main Street businesses like breweries, restaurants, retail shops, and salons, and is now entering the cannabis space.
As for similarity to the other businesses they work with? Mainvest knows marijuana businesses are far from a restaurant or brewery in terms of complexity. To compensate, Mainvest offers further risk disclosures for cannabis firms and requires an existing banking relationship of anyone wanting to raise.
How do you get involved? The time to invest in cannabis is now. Mainvest allows anyone with as little as $100 the ability to buy Revenue Sharing Notes in projects like dispensaries, cultivators, edibles, cannabis brands and more. Aptly named, Revenue Sharing Notes entitle investors to a share of revenue the businesses they’ve invested in may generate until either the note is paid back, with interest, or it reaches maturity and needs to be paid in full. For example, if an investor invests $100 in a business with a 3x target return, that investor is entitled to be repaid a total of $300 in increments over a set period of time, paid out as a percentage of revenue, or the the balance at maturity.
As for any investment offering on the platform, Mainvest cautions investors about the risks they take, and reminds investors that it is not guaranteed a business will ultimately be successful or generate revenue. To get started investing in cannabis, head to mainvest.com/businesses where you’ll be able to see all offerings in the marijuana industry that are accepting investment.
Ok, so how does it work for cannabis entrepreneurs? Growing a cannabis business with Mainvest means access to capital with terms set by the business owners, not private investors . The platform enables entrepreneurs to grow their roots by raising up to $5MM in funds from both accredited and non-accredited investors in their networks or across the country.
The platform itself is incredibly user-friendly, allowing businesses to connect directly with potential investors in a number of ways. Mainvest is comprised of an all-in-one investor relations tool that allows for communication both during the fundraising campaign and the lifetime of the repayment. Unlike companies publicly listed on the stock market, businesses raising on Mainvest are easily accessible by investors, forging stronger connections between investors and local businesses.
In addition, Mainvest allows every business to set their own terms that make sense for long-term growth and increased customer loyalty. Thanks to the Revenue Sharing Note, repayments are always based on revenue, not equity, meaning that there is never any dilution of ownership nor personal guarantees or credit checks. You can check out the plethora of successful small businesses that have used Mainvest to start or grow by visiting the company’s Funded Gallery.
What is a Revenue Sharing Note? In order to make access to capital easier for small business, Mainvest needed a way to keep capital flexible for businesses, yet profitable for investors. This is where the Revenue Sharing Note trumps other investment platforms. Instead of offering equity, Revenue Sharing Notes allow cannabis businesses to share a fixed percentage of revenue with investors each quarter. Because of the platform’s flexible nature, businesses choose the percentage of revenue (and all the other terms) to offer investors.
How complex is the process? Mainvest is a full service platform, meaning they hold a businesses’ hand every step of the way. In fact, they even have a dedicated Business Success team existing solely to ensure every offering reaches its target. From handling the SEC filings and setting up an escrow account to pitch coaching, press strategy, digital marketing tools and more, the Mainvest team helps with it all.
What’s next ? Since the launch of Mainvest’s pilot cannabis project, Eastcoasterdam Gardens, the platform has seen an influx of sign-ups from marijuana companies looking to raise capital. Just last week, @loudgirlgoodies, a plant-based edibles company located in Boston launched an offering and a few more expected to go live this week. In addition, a number of news outlets across the country have written on what Mainvest is doing for cannabis entrepreneurs, including Politico and Cannabis Business Times. In the words of CFO Ben Blieden, “Mainvest has solved the age old problem of funding for cannabis businesses, a problem that has no other solution at the moment.”
In talks with 50 to 60 other marijuana businesses, CEO Nick says they are “all in” when it comes to cannabis. Just this past weekend, the team attended NECANN (New England Cannabis Convention) to spread the word on this new viable capital route for cannabis entrepreneurs. Stay tuned to what they are up to by following along on Instagram (@mainvestinc) or any of their socials.
Interested in raising capital for your marijuana business? Visit mainvest.com/for-businesses/cannabis and sign up for a profile. If the team thinks you’re a good fit for the platform (and you think they’re a good fit for your business), they’ll be in touch.