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Summary

Diversify your portfolio by investing in small, local businesses — but keep in mind they carry risks.

Mainvest is a crowdfunding platform that allows you to invest in small, brick-and-mortar businesses throughout the US. Businesses that join the platform offer investors a variety of securities to choose from, and you can start investing with $100. But the businesses on Mainvest are small with limited track records and profits, so they’re inherently risky.

  • Consider Mainvest if you have a high risk tolerance and want to diversify your portfolio while supporting small, local businesses.
  • Look elsewhere if you’re a short-term investor or are uncomfortable with high-risk investments.

In this guide

  • Review
  • Details
    • Features
  • Your reviews
  • Ask a question

Details

Features

Annual fee $0
Available asset types Real estate
Account types Other
Average return 10% to 25%
Minimum deposit $100

How does Mainvest work?

As an investor on Mainvest, you provide funds to small businesses that are preparing to launch or expand. In return, businesses agree to share revenue with investors each quarter until a specified amount is reached.
Each revenue-sharing note comes with an investment multiple, which is the total amount owed to you no later than the maturity date. For example, if you invest $100 into a business that offers a 2X investment multiple, the business agrees to share a portion of their revenue until you have been repaid $200. This exact amount and the maturity date are outlined under each investment.

Investment insights are extensive

When browsing investments, you’ll have access to extensive information about the investment opportunity, including, but not limited to:

  • Location and background of the business and team
  • Average daily customers
  • Projected annual revenue
  • Intended use of funds
  • Financial forecasts of the business
  • Business plan
  • Financial condition of the business
  • Risk factors specific to the business and market

Businesses have the option to offer several types of securities

As of February 2022, these include:

  • Debt securities. These are promissory notes that require the business to pay you back with interest over a specified time period.
  • Revenue-sharing notes. These require the business to pay 5% of its revenue for four years, specify the maximum amount you can receive and a due date for repayment of the original investment.
  • Equity-alternative Revenue (EaRN) Notes. Offer a longer term than a revenue-sharing note and more potential upside. The business pays back a percentage of its revenue up to a certain amount and then pays a lower percentage of revenue until a specified maturity date.
  • Equity securities. Like a common stock in a company, you share in the business’s prosperity and poor performance. You usually share in any profit distributions as well.
  • Preferred equity securities. Like preferred stock in a company, except you typically receive distributions before holders of regular equity securities.
  • Convertible securities. These types of securities start off as one type of security but can be changed to a different type.

Who is Mainvest best for?

Mainvest is best for investors comfortable with taking higher amounts of risk. The businesses on the platform are small businesses that might not be turning a profit, so they’re inherently risky. While it doesn’t mean you will lose money, like any investment, you should be comfortable with the possibility.
As a result, Mainvest is best for:

  • Accredited investors. Although non-accredited investors can participate, accredited investors are not subject to the same limits on how much they can invest under SEC Title III.
  • Long-term investors. Many of the maturity dates for the securities offered on Mainvest are five to 10 years out. The securities offered are also highly illiquid and have various transfer restrictions with no secondary market on which to sell them. In other words, once you invest, you may not be able to sell the securities.

Pricing and fees

Mainvest doesn’t charge fees to join its platform. In comparison, many other investment crowdfunding platforms charge account setup fees and annual management fees.

Pros and cons

Consider these benefits and drawbacks before investing with Mainvest.

Pros

  • No fees. Mainvest doesn’t charge fees for investors to use its platform.
  • Diversification. If the majority of your portfolio comprises low-risk investments, investments through Mainvest can help balance your portfolio.
  • You have the option to back out. You can cancel your investment commitment at any time up to 48 hours before the offering deadline.

Cons

  • Limits on how much you can invest. By SEC rules, non-accredited investors are limited to how much they can invest in regulation crowdfunding offerings each year. This limit depends on your income and includes investments across all regulation crowdfunding platforms, not just Mainvest. As noted by Mainvest, investors with an annual income or net worth of less than $107,000 can invest the greater of $2,200 or 5% of their annual income or net worth, whichever is greater.
  • High risk. In general, about half of small businesses survive at least five years. And each of the different investments on Mainvest has its own business-specific risks. Mainvest does vet participating businesses, but it also points out that some of the companies listed on its site will likely fail to repay their loans, which means you need to be OK with the possibility of losing your entire investment.
  • Unpredictable payments and returns. Payments to investors are based on the revenue generated by the business, which can fluctuate significantly and even disappear. So there’s no guarantee how much you will receive and when.

Mainvest reviews and complaints

As of February 2022, Mainvest doesn’t have any reviews on its Better Business Bureau (BBB) profile. However, it is an accredited company with the BBB and earns an A+ rating for having zero complaints lodged against it. It does not have a Trustpilot page.

How do I get started?

Getting started with Mainvest is a breeze. The entire investment process takes place online and can be completed by following these steps:

  1. Register with Mainvest by providing login credentials and personal information.
  2. Review and comply with Mainvest’s terms and conditions.
  3. Browse investment opportunities and select Invest when ready.
  4. Supply additional information, enter your payment information to set up a bank transfer and sign an investment agreement.

After you submit an investment commitment, you’ll be informed of the date and time by which you can cancel your commitment. You can cancel your investment for any reason at any time up to 48 hours before the offering deadline. And if there’s a significant change in the offering, you have the option to step away or reconfirm your commitment.
Once you make your investment, you can’t sell or transfer the security for 12 months, except if the sale or transfer is:

  • Back to the business
  • To an accredited investor
  • To a family member
  • To a trust under your control
  • To a trust created for the benefit of a family member
  • In connection with death or divorce

Mainvest customer service

Contact Mainvest by:

  • Phone. Call ​​978-414-5989‬
  • Email. Send an email to info@mainvest.com
  • Live chat. Speak with a Mainvest representative through the website’s live chat feature during regular business hours.

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Bottom line

Mainvest allows accredited and non-accredited investors to invest in a variety of small businesses throughout the US. The platform charges no fees to investors and minimum investment amounts are typically around $100. But non-accredited investors are limited to how much they can invest each year.
If you’re comfortable with high-risk investments with the potential to offer attractive returns, Mainvest might be worth considering. Investors who like the idea of helping small businesses will also likely find Mainvest to be appealing.

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Matt Finder

Editor, Investments

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