Mainvest Review – Small Business Investing
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If becoming an investor is your dream, you may want to check out Mainvest. Mainvest allows regular people (18 or older) to invest in small businesses across America with just $100.
Here’s everything you need to know about Mainvest, including its business vetting process and how to get started.
Related: Best Crowdfunding Investing Apps
In this article
What is Mainvest?
Mainvest is a crowdfunding platform that allows investors (or regular people with a passion for helping others) to connect with small business owners who need extra cash to continue growing their businesses. What’s more? You don’t have to be loaded to join. According to the company website, investors gain 10% to 25% returns with as little as $100.
How does Mainvest work?
To get started, visit Mainvest.com and click “Get Started.” You can also click “Sign Up.” This will open the following screen:
You’ll be asked to enter your email and create a password. Mainvest also allows you to sign up with a Google account to bypass this step. You can access your dashboard immediately if you sign up with a Google account.
Here, you’ll see a sidebar on the left-hand side of the screen and a “Get Started” button. Go ahead and click “Get Started.”
This will bring you to a new page that reads: “What industries do you want to include in your portfolio?” Mainvest offers investment opportunities in brick-and-mortar businesses, including coffee shops, distilleries, and salons. You can also invest in real estate.
Choose a few and click “next.” You can also skip this step.
Once you’ve decided what to invest in, you’ll be asked where to deploy your capital. The current options include the East Coast, West Coast, South, and Midwest. Choose one or more and click “next.” You can also skip this step.
You’ll then be asked how much you’d like to invest. You cannot skip this step. Although the system will allow you to input whatever number you want, Mainvest has a $100 minimum investment requirement.
To add money to your investment account, click “$ Accounts.” This will bring you to the “Investor Verification” process. You’ll be asked to enter your first and last name, address, phone number, and date of birth.
If you plan on investing $5,000–$15,000, you’ll need to enter your social security number (required to transact more than $5,000) and upload a photo (required to transact more than $15,000).
One place for all your investing
Options Trading
- Get up to a $0.18 rebate
- No commission or per-contract fees
High-yield cash
- Earn 5.1% APY*
- No fees. No subscription required.
Bonds
- 6% Yield or more
- Explore thousands of bonds yielding 6%+
How much does Mainvest cost?
Mainvest requires all investors to make a minimum investment of $100 using a US-based checking account. Note: Mainvest doesn’t allow investors to use a credit or debit card.
Mainvest features
Five-point vetting process
All business owners interested in being featured on the Mainvest platform must qualify first. (They’re not letting just any average Joe through the door!) At a minimum, the business must raise $10,000 or more from 10 people they know before becoming part of the Mainvest community.
Additionally, Mainvest uses five-point criteria to decide whether or not a business can participate:
- Anti-fraud vetting. Mainvest “must have a reasonable belief that each business that launches on the platform does not raise a risk of fraud or otherwise raise an investor protection concern.” That said, this doesn’t mean the platform's investment opportunities come without risk — all investments require some risk.
- Responsibility check. Before a business can become a Mainvest business, the company does a Responsibility Check to ensure that the business owners are prepared, can communicate effectively, and have a good head on their shoulders (e.g., no concerning social media activity or missing financials).
- Bad actor check. Once a business clears the Responsibility Check, the next step is to go through the Bad Actor Check (BAC) — a limited background check of the business, its managers and officers, and anyone else who owns 20% or more of the business.
- Yellow flag BACs. Mainvest also pulls Yellow Flag BACs. These could include traffic tickets, lawsuits, etc. If something raises a concern, it’ll be reviewed during this process.
- Continuous review. Those who manage to pass the previously-mentioned steps will be under continuous review. This means that even businesses accepted into the program are subject to retraction if there’s a chance of fraud or risk.
Data room
Mainvest offers educational resources on their blog. Here, anyone (including people who haven’t signed up for Mainvest) can see info on each business featured on the platform, including:
- SEC Filings
- Business plans
- Risk factors
- Financial forecast
Revenue sharing notes
Investing with Mainvest is a bit different than investing in the stock market. With Mainvest, you’re a debt investor — Mainvest investments help investors generate returns (quarterly repayments) from business owners in exchange for helping them grow their businesses.
As the issuer of securities, you’re in the driver’s seat (e.g., you have control over the terms, including the maturity date and investment multiple). The rate of return is determined by the business’s gross revenue and the percentage of revenue they share each quarter.
One place for all your investing
Options Trading
- Get up to a $0.18 rebate
- No commission or per-contract fees
High-yield cash
- Earn 5.1% APY*
- No fees. No subscription required.
Bonds
- 6% Yield or more
- Explore thousands of bonds yielding 6%+
Who is Mainvest best for?
Accredited and non-accredited investors
Mainvest is a user-friendly investment platform that allows accredited and non-accredited investors (18 or older) to invest in local businesses.
Who shouldn’t use Mainvest?
Investors interested in stocks or cryptocurrency
Mainvest is the “investment marketplace for Main Street businesses and local investors.” So, if you’re interested in investing in stocks or cryptocurrency, you must search elsewhere.
Investors interested in digital startups
Mainvest is an investment platform for brick-and-mortar businesses, not digital media companies or startups.
Pros and cons
Pros
- Low minimum. Mainvest makes it easy to start investing. All you need is $100 to invest in one or more local businesses across the U.S.
- Several investment options. Mainvest offers a variety of investment options, from small bakeries to cannabis to livestock.
- Solid vetting process. Mainvest helps reduce your investment risk by thoroughly vetting each business listed on the platform.
- Better Business Bureau (BBB) accredited. Mainvest is accredited by the BBB and has maintained an A rating since 2019.
- Track record repayment rate. Mainvest reports a track record repayment rate of 96%.
- High target returns. According to the Mainvest site, investors see 10–25% returns.
Cons
- Risk. There are risks associated with any investment you make. If a Mainvest business fails to pay you on time, one of two will happen: balloon payments: This is where a business repays an investor a lump sum and defaults: If the business defaults, interest will accrue on the amount owed. An investor can seek legal action to force the business to pay what’s owed or bankruptcy. Note: Mainvest does not/will not help you with this.
- Investments are illiquid. When you invest on Mainvest, you’re stuck with that investment until the maturity date. This is because Mainvest works by allowing investors to finance business debt (there’s no secondary marketplace and no equity to sell), and no equity means no liquidity.
Mainvest vs. competitors
Platform | Minimum investment | Best for |
Mainvest | $100 | Non-accredited investors |
OurCrowd | $10,000 | Accredited investors |
Fundable | $1,000 | Accredited investors |
OurCrowd
Founded in 2013, OurCrowd is a global venture investing platform that allows accredited investors to invest in a wide range of startups (e.g., IoT, e-commerce, internet retail, gaming, etc.). That said, the minimum investment is set at $10,000.
Fundable
With Fundable, investors can receive rewards or equity in exchange for their funding. For those who choose reward raises, the minimum commitment can be as little as $1. But, for those who’d like equity raises, the minimum is $1,000.
FAQs
What is an accredited investor?
An accredited investor is someone who has maintained an annual income of $200,000 or more for the last two years or has a combined income of $300,000 for the last two years; has a net worth of $1 million or more; and is designated as an “accredited investor” by SEC rule
Is Mainvest safe?
Mainvest is a BBB accredited business. Even so, every investment comes with a risk. Considering all of the investments on the Mainvest site are small businesses with limited resources, investing in one or more of Mainvest businesses could be considered a high-risk investment.
What is an example of an alternative investment?
According to the CFA Institute, alternative investments include venture capital, private equity, hedge funds, managed futures, and collectibles or antiques (e.g., art).
One place for all your investing
Options Trading
- Get up to a $0.18 rebate
- No commission or per-contract fees
High-yield cash
- Earn 5.1% APY*
- No fees. No subscription required.
Bonds
- 6% Yield or more
- Explore thousands of bonds yielding 6%+
The bottom line
Investing in a small business is one way to diversify your portfolio and make passive income while helping the community. However, investing in local brick-and-mortar is risky. If you can’t afford to lose your money or are worried about having your cash tied up in an illiquid investment, you may want to invest in something simpler, like fractional shares.
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Writer
Tabitha Britt is a New York-based freelance writer and editor whose work has appeared on INSIDER, the Huffington Post, and Taste of Home. When she's not glued to her computer screen, she can be found walking her beloved pooch, Biscuit.
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