SAN FRANCISCO--(BUSINESS WIRE)--SMBX, the financial marketplace helping small businesses raise capital from retail investors in their communities, today announced the close of an $11.5 million seed funding round. The round was led by Dovi Frances’s Group 11, with participation from existing investors Better Ventures, Impact America Fund (IAF), Unpopular Ventures, Berkeley SkyDeck, and former Vanguard executives Paul Heller and Jim Norris.
The company has now raised $15 million in total to support its Small Business Bond financial marketplace that allows people to invest directly in the small businesses they want to see flourish in their local communities.
SMBX was founded by Ben Lozano, Chief Executive Officer; Bhavish Balhotra, Chief Technology Officer; and Jackie Chan, Chief Operating Officer. They created the SMBX marketplace and the Small Business Bond after the SEC implemented Title III of the JOBS Act in 2016, making it easier for people to invest in startups and small businesses as non-accredited investors.
"Traditional banking as we've known it is coming to an end," said Dovi Frances, founder of Group 11. "Today's fintech leaders are building an entirely new paradigm of financial products and services that are unrecognizable from legacy systems. These new products must democratize lending to reach those who need it most. At Group 11, we believe the future of fintech will be led by pioneering companies like SMBX and their Small Business Bond."
"There’s a new generation of entrepreneurs emerging who want something different from finance. The SMBX provides them the opportunity to become Bond issuers instead of simply loan takers. As issuers, they can connect more deeply with their community of customers and create a virtuous cycle of wealth creation--where profits generated through lending, borrowing, and wealth growth are re-circulated and shared with their community," said Ben Lozano, CEO and co-founder of SMBX. “This is what this new generation of entrepreneurs want. And this is what The Small Business Bond provides.”
During the COVID-19 pandemic, small businesses struggled to remain open. Many customers and supporters wanted to help, and even participated in crowdfunding campaigns to support them. The SMBX marketplace improves on the crowdfunding model by allowing them to invest directly in these businesses by purchasing Small Business Bonds.
D.C. Mayor Muriel Bowser recently announced a partnership with SMBX called the D.C. Rebuild Bond program to help fuel $5mm in local investment for D.C. small businesses. The program focuses on communities long-neglected by the traditional banking system.
The SMBX marketplace and its Small Business Bond make raising money less intimidating and financially burdensome to the borrowers while offering a new investment vehicle for individual investors. This new community financing model has proven to be successful financially for both issuers and investors, while creating a depth of emotional and financial connection between a business and its customers.
On the SMBX marketplace, qualified small businesses work with SMBX to determine the amount of money to be raised, then offer Small Business Bonds to the general public -- often their most loyal customers -- who can directly support businesses they love while making a up to 10% return on their investment*. The Small Business Bonds can be purchased for $10 each.
Investors in these Small Business Bonds are earning the full interest charged to the businesses and are repaid each month with principal and interest*. For example a $5,000 investment in an 8% Bond maturing over 7 years will pay over $1,500 in interest, or over $77 per month in principle and interest*.
“By moving our debt service from banks to Small Business Bonds, we allowed our friends, family and customers to invest directly in our success, earn interest and grow their wealth,” said Tomas Sluiter, owner of Culmination Brewing in Portland, OR, which raised $400k at 8% on SMBX to build a new canning line and tanks to grow his business.
The SMBX marketplace empowers small companies around the US to raise critical capital to expand, diversify, and strengthen their businesses. Examples include:
- Humphry Slocombe (SMBX: SLCM) is a San Francisco ice cream chain that raised funds to refinance debt and open a new location. Total raised: $250,000 at 8% interest.
- Super Belly Ferments (SMBX: SUPR) is a Bend, OR company selling fermented salad dressings and probiotic drinks that raised funds to place its products in regional grocery stores. Total raised: $75,000 at 7.5% interest.
- Quesadilla Gorilla (SMBX: DLLA) is a Visalia, CA restaurant ranked 3rd on Fortune’s Top 100 Fastest Growing Inner City Businesses in 2019. Their funds are being used to open new locations. Total raised: $165,000 at 6% interest.
- Kai’s Baking Studio (SMBX: KAIS) is a Houston, TX family-owned gluten-free baking studio that raised funds to grow from its retail bakery to full-time wholesale production. Total raised: $41,670 at 8% interest.
- Popoca (SMBX: POCA) is a pop-up Salvadoran restaurant that raised funds to open its first permanent location in Oakland, CA. Total raised: $115,000 at 7.5% interest.
- Sticky Fingers Sweets & Eats (SMBX: STKY) is a fully vegan, Washington, DC-based bakery raising funds to expand its business nationally. Raising $500,000 at 7% interest.
About SMBX
SMBX is a small business capital marketplace for issuing and buying Small Business Bonds. With it, small businesses can issue Bonds directly to their customers and community. Those who invest in the small businesses listed on the SMBX can earn up to 10% annual interest, and the businesses, in turn, can obtain the capital they need at an interest rate that ranges between 5 and 10%. The Small Business Bond marketplace is a new financial model that keeps community ties strong, supports small businesses, and rewards everyday investors with reliable returns from the companies they love*. LinkedIn | Twitter | Instagram | Facebook | Website
About Group 11
Group 11 invests in revolutionary software companies that are redrawing the landscape of the financial services industry. As fintech continues to gain momentum and to disrupt the traditional industry value chain, Group 11 has positioned itself as a partner of choice to provide capital and guidance to entrepreneurs that are creating the world’s next generation of financial services industry leaders. Since its inception, the firm has deployed over $500 million in some of Silicon Valley’s most prominent and disruptive financial technology companies, including Papaya Global, Tipalti, TripActions, HomeLight, SunBit, Next Insurance, Lili, Addepar, and EquityBee to name a few. Learn more: group11.vc and medium.com/group-11-vc.
*Investing in Reg CF securities includes financial risks, including loss of money invested. All estimated returns on principal + interest are not guaranteed. This statement is based on the following assumptions: 1) an offering successfully closes and an investor is allocated a Bond or Bonds, 2) that the investor holds their Bonds to maturity and 3) that there are no defaults made by the issuer on any of the Bond payments from issuance to maturity.
