Worcester Business Journal

12 Worcester Business Journal | May 5, 2025 | wbjournal.com BY MICA KANNER-MASCOLO WBJ Staff Writer O perating a small business has never exactly been easy. e U.S. Bureau of Labor Statistics reports one in five businesses fail within their first year and 50% of small businesses fail within five years. Sobering numbers for budding entre- preneurs. e rising costs of real estate, goods, and labor have made it harder to sustain a business, nevermind grow one, espe- cially with limited access to capital. To solve this problem and help grow their burgeoning customer bases, two Central Massachusetts small businesses have turned to alternative, communi- ty-based fundraising methods to support their expansion efforts. Essentially, they are asking customers and others in the Two Central Mass. restaurant groups have found a new way to finance expansions: direct contributions from customers million through an exemption under the U.S. Securities and Exchange Com- mission, offering an equity stake in the business in exchange for investments. e exemption allowed the company to fundraise from accredited and up to 35 non-accredited investors that Nan's had already had pre-existing relation- ships with. Because financers didn't need to be accredited, which includes meeting certain financial benchmarks outlined by the SEC, Nan's was able to obtain inves- tors such as employees and customers, those with a vested interest in seeing the company succeed. Operating under the exemption also meant the restaurant couldn't advertise its fundraising to the general public, and instead had to work within its connections, which included anyone who had previously ordered from its shops. Nan's ended up accruing 45 investors in exchange for about 9% equity in the company. Raising community capital Mackey had originally wanted to go the bank financing route to support his expansion. "As a founder, everyone tells you 'Don't give up ownership in your company,'" he said. But taking a critical eye to his business plan, he realized that sentiment didn't fit within his goals. "I don't need to own this much of it. I'm not planning to do this for 40 years," he said. Furthermore, unlike partnering with community members, loans and lines of credit aren't collaborative ventures, and they come with strict oversight and regulations. "ey don't give you advice. All they do is charge you interest and make it re- ally difficult for you to spend the money that they're loaning you," said Mackey. Instead, Nan's now has 45 new inves- tors, which means 45 more people's fam- ilies coming in for sandwiches, ordering for their pool parties, and telling their friends about their ownership in a local establishment. e crowdfunding meth- od comes with built-in marketing. Like Mackey, the owners of Worces- ter cafe Cordella's had considered more traditional financing options to fund their expansion project, like taking out a small business loan, but ultimately felt that approach didn't align with their operational goals. ey didn't consider well-known crowdfunding platforms such as Kick- starter and GoFundMe for a number of logistical and strategic reasons. For one, Kickstarter mandates that a campaign must reach its full goal in order for its or- ganizers to receive the funding. Secondly, the owners have observed platforms like GoFundMe are more commonly used for emergency and/or acute situations, rath- er than initiatives like expansion projects. In an effort to best utilize their space F O C U S SMALL BUSINESS The growing Nan's Kitchen Nan's Kitchen has a goal to operate 12 Massachusetts restaurants in the next five years. Location Date opened Square feet 271 Great Road, Stow November 2020 5,900 359 Turnpike Road, Southborough September 2022 3,450 160 Littleton Road, Westford January 2025 3,250 10 Main St., Andover Upcoming: June 2025 3,350 Source: Nan's Kitchen community to provide them with money, in exchange for equity or discounted goods and services. "If we invest in each other, in the communities, we stand to really win big time," said Jordan Mackey, owner of the restaurant Nan's Kitchen. Nan's, which operates locations in Stow, Southborough, and Westford, announced in January it had raised $1.2 An alternative way to raise money PHOTOS | EDD COTE Jordan Mackey decided to make Nan's Kitchen a counter service establishment after noticing customers were favoring take-out options as opposed to dine-in restaurants post-COVID.

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