Deal upsized to $1.7 million from Montage Ventures, Kapor Capital, DRW Trading Group among others.
CHICAGO, Jan. 29, 2015 /PRNewswire/ — Bolstr, a marketplace where emerging consumer, retail and manufacturing businesses can access growth capital from accredited investors, has raised $1.65 million in series seed funding, an amount that was recently upsized from the original $1.5 million target. Backers include Montage Ventures, Kapor Capital, DRW Trading Group, Merrick Ventures, and Wilson, Sonsini, Goodrich & Rosati.
Led by former investment bankers, Charlie Tribbett and Larry Baker, Bolstr aims to help emerging small businesses access capital from a pool of accredited investors utilizing an innovative revenue share structure. Through the platform, business owners are able to quickly raise capital to fuel growth while maintaining 100% equity ownership. Each monthly payment back to investors is sized by a set percentage of gross sales, providing investors with liquidity early and often. Businesses also benefit from flexibility in the repayment structure, since each payment is proportional to their gross sales volume.
Payments are made until investors make a set return back on their investment, so the time frame of each loan is variable, and there are no prepayment penalties. This provides protection for seasonal businesses that are investing in growth initiatives. This also provides investors with return upside as a business grows revenue, and repays investors back sooner than anticipated.
“Marketplace lending is a $1 trillion market (LendingClub, OnDeck Capital etc.), and specifically, the landscape for small business funding is quickly shifting away from traditional banks and more so to platforms like Bolstr,” said Charlie Tribbett, Co-Founder of Bolstr.
“Bolstr leverages technology and data science to approve and fund businesses up to $500,000 rapidly, with flexible deal terms, while giving accredited investors first time access to private, liquid investment opportunities,” adds Larry Baker, Co-Founder of Bolstr.
What makes investing on Bolstr attractive is their proprietary underwriting process, designed to efficiently and effectively evaluate and understand credit risk for each business. Metrics analyzed include traditional factors such as liquidity ratios and credit scores but also incorporates metrics such as Yelp ratings and reviews on social media.
Bolstr estimates that there are roughly 8 million potential accredited investors in the US who have yet to make private business investments due to lack of access to emerging opportunities, and a lack of understanding of the potential risk. To appeal to these accredited investors, who must verify with Bolstr before investing, each business on the platform goes through a detailed underwriting evaluation. This model allows investors to gain first-time access to private, liquid investment opportunities with higher returns than managed funds or traditional fixed income opportunities.
Thus far every business that has raised funding on Bolstr has reached its target within five days, there have been zero defaults, and 64% of the investors within any given deal have been new investors. Bolstr makes money by charging a flat fee to every business that is approved to list on the platform, and does not take transaction-based compensation.
Based in Chicago and founded in 2011 by former investment bankers Charlie Tribbett and Larry Baker, Bolstr is a marketplace where emerging consumer, retail and manufacturing businesses can access growth capital from accredited investors. Every raise on Bolstr uses an innovative revenue share investment structure, where businesses can access $25,000 – $500,000 to invest in growth, retain 100% of their equity, and make flexible monthly payouts to investors, since they are sized proportionally to their revenue. Investors then receive revenue-based payouts until they make a multiple back on their investment. For more information, please visit bolstr.com, Facebook or Twitter or watch How it Works.