On the verge of new regulations, the first crowdfunding websites aimed at attracting investors are kicking in. One of them is EquityEats, a site dedicated to investments in restaurants, with opportunities of US$ 500 and above.
The company promises to offer a complete service to “investomers” (the funding will be done locally, reason why investors will also be customers). They will evaluate each project in order to assess their feasibility and viability. Investors will also have to properly identify themselves, giving proof of residence. In some cases, only accredited investors can participate in the pool and they will have to go through the proper checks.
Every project is an all or nothing campaign, which means that if the community of investors did not fund it to the minimum, than all money commitments are returned to funders. All restaurants must also raise the equivalent of 3 months off of the projected expenses in order to be deemed successful.
After enough funds have been raised, EquityEats will invest the money in the restaurant and be the co-owner of the company. All reports to investors will be available in the company website.
The concept behind it is the real innovation: By crowdfunding a new restaurant in a local community (the company claims they are not a crowdfunding company, but the concept applies, nonetheless) the odds of success increase substantially, as each investor will tend to be an advocate of the brand. The restaurant owner will be guaranteed enough funds to start the business with the help of EquityEats.
Investors will have all the transparency they expect, with quarterly results, plus benefits at the restaurants they invest in, as well as the preference on dividends distribution (until they’re paid back the original amount invested).
EquityEats are currently only receiving investments for business proposals in Washington D.C..
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