There are a whole host of crowdfunding platforms out there. That said, these platforms are still mostly relegated to new physical products or software/apps. Crowdfunding, though, has done very little for traditional businesses. Well, there was a company at 36/86 that wants to change that.
EquityEats has created a new equity crowdfunding platform aimed at helping restaurants. Right now, though, the platform is only available in Washington D.C. With EquityEats being and equity platform, there are no sort of rewards or anything of that nature. Rather, if an individual decides to invest in a business, he or she will own a percentage of said business. The platform, though, is only open to accredited investors.1 Other than that, the platform works in a similar manner to Kickstarter:
The entrepreneurs have complete control and responsibility over their concept. After they have built their project pages they launch their concepts on EquityEats. Each concepts has a projected funding goal and deadline. If the community likes the concept, they can invest money to help meet the goal in exchange for investor perks and an equity stake in the concept. Funding on EquityEats is all-or-nothing, so if the concept does not meet its funding goal by the deadline, those who have invested will have their money returned.2
The structure of the investments are also pretty interesting. In general, the investors receive a substantial chink of equity. The interesting part, though, is the payback model. Rather than simply sharing in the profits according to the percentage of equity, investors recieve a larger share of the profits until they receive their principal back:
Investors receive a preferred share of the distributable cash flow (typically no less than 75%) until they have been paid an amount equal to their original investment. From that point, they will receive a share of the distributions in proportion to the share of the company the investor’s investment represents.3
EquityEats took to the 36/86 stage during the quick pitch session. Below is the company’s pitch: