Hartford Business Journal

9 HARTFORDBUSINESS.COM | MAY 3, 2021 STARTUPS, INNOVATION & TECHNOLOGY Gregg J. Lallier Tomas Nenortas gauge [community] interest and get feedback." Another advantage, says Kaylin Kuza, a business success manager with Mainvest, is the flexibility that crowdsource funding provides. The quarterly repayment schedules, which companies like Mainvest track and manage for clients, depend on the business revenue, and can fluctuate in size based on the quarter's bottom line. "There's no set repayment like a bank loan, and that's a big advantage," she said. Mainvest was founded in 2018 and is one of a handful of crowdsourcing companies that allows revenue sharing as a debt instrument. As part of its suite of services, Mainvest registers its clients with the U.S. Securities & Exchange Commission, a requirement of all businesses that run revenue-sharing crowdsource campaigns, tracks revenue and repayments to investors and promotes their clientele to investors and the community. Kuza says typical crowdsource campaigns range from $10,000 to $250,000, at which point more stringent regulatory requirements apply. Crowdsource funding, she says, is typically a component of a startup's capital strategy, but rarely provides all the capital required. "Usually, it's in conjunction with a bank loan, personal funds or private [equity]," Kuza said. In its first two years, Mainvest has helped more than 150 companies — including some small businesses looking to expand — to crowdfund. Gregg Lallier, chair of the emerging companies and venture capital practice group at Hartford law firm Updike, Kelly & Spellacy P.C., says crowdsource funding will likely continue to grow, especially among the younger generation of entrepreneurs who are, in general, more comfortable with online portals and having several non-accredited — or non-vetted — investors whom they do not know. That creates an opportunity for both the startup owners and small investors, Lallier said. "Crowdsource funding allows [a non-accredited investor] to invest as little as $100 and provides a market opportunity for people who aren't necessarily high net worth individuals to invest in startups," he said, noting that by outsourcing the administration of the crowdsource campaign to a third party, entrepreneurs can focus less on the capital raise and more on getting the business up and running. Added perks That's something Tomas Nenortas understands. As the CEO of Moxi on the Rocks, a new East Hartford- based alcohol distillery and retail shop slated to open in 2022, Nenortas is planning to redevelop the Burnside Mill complex on Church Street. He estimates the total project, which includes restoring the distillery's hydropower, will cost nearly $1 million. And while he is benefiting from reimbursable tax credits due to the historic nature of the building, $150,000 in private investment and seeking bank loans, Nenortas also launched a $107,000 crowdsource campaign — through Mainvest — earlier this year, which exceeded its goal. As an added incentive, Nenortas' campaign included benefits for investors at various levels, including 10% off purchases at Moxi on the Rocks for life, access to VIP events, including the grand opening next year, and an 80% return on investment for initial investors — over a 10-year repayment period. Ultimately, Nenortas' vision is for his establishment to be a one-stop tasting location for Connecticut- based beverages, including alcoholic and non-alcoholic options. "We're very excited for [people] to come and experience [many of] Connecticut's beverages under one roof," he said. He says interest from other crowdsource investors motivated him to launch a second, but smaller, campaign. McCormack has seen similar demand for WeHa Brewing and Roasting Co. and will likewise be launching a second-round funding push, this time with investor perks, like a "mug club" rewards program, as part of the draw. It's a small way to offer something to the community of investors that have helped make his dream come true. Market size of crowdfunding worldwide in 2019 and 2026 Year Total crowdsource funding 2019 $13.93B 2026` $39.79B Source: Statista A rendering of the planned WeHa Brewing & Roasting Co. in West Hartford. RENDERING | CONTRIBUTED CONNECTICUT IN MOTION A TRANSPORTATION WEBINAR SERIES: SESSION TWO THE IMPACT OF COVID-19 ON CURRENT WORKPLACE TRENDS AND COMMUTING Join us on May 18th at 12:00 pm for the second in a series of webinars exploring transportation topics that affect Connecticut's businesses and residents. This webinar will explore COVID-19's impact on return to work expectations, the evolving nature of commuting, and strategies for how organizations can move forward in this uncertain time. Dennis House, News 8 WTNH, will moderate a discussion among leading workplace consultants and transportation experts. REGISTRATION IS FREE AND NOW OPEN ON: www.newhavenbiz.com/new-haven-biz-events/CTinMotion Moderator: Featured Speakers: Dennis House Chief Political Anchor, News 8 WTNH Kelly Bacon, Global Practice Lead - Workplace Advisory at AECOM Kim Lesay, Bureau Chief, Policy and Planning, Connecticut Department of Transportation Lauren Mason, Senior Principal, Mercer PRESENTED BY: EVENT PARTNERS: MEDIA PARTNERS: MAY 18 TH | 12 PM • Middlesex Chamber of Commerce • Waterbury Chamber of Commerce • Chamber of Commerce Northwest Connecticut, Inc. • Greater New Haven Chamber of Commerce • CBIA • MetroHartford Alliance • CTSHRM

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