Customers flock to Mamaleh’s Delicatessen in Kendall Square for its bagels and lox. Now its owners are hoping patrons will also have an appetite to back their business as they plan an expansion in Brookline.
The company said Monday that it has launched a $180,000 fund-raising effort to help with the opening of a new cafe in Brookline’s Washington Square. The announcement also marks the launch of a new Boston-based community financing platform, NuMarket, which has been in development since the start of the pandemic.
NuMarket’s founder, Ross Chanowski, had been living in London when the pandemic hit. He returned home to Boston and found many of his favorite small businesses struggling to stay afloat, and hordes of their supporters scrambling to find ways to help.
“Everyone wanted to support all of their local favorites. We were all trying to do something and nobody really knew what to do — we were hashtagging and buying gift cards and tipping delivery drivers,” he said. “It appeared to be a symptom of a larger cause, which was a lack of access to financing that really works for small businesses.”
That insight led him to begin building NuMarket. It’s designed as a crowdfunding platform that works as an alternative financing source for independent businesses. When a customer chooses to support a business, they get a 120 percent return on their investment in credits at the business — so a $100 investment is worth $120 in credits at a restaurant, salon, or yoga studio. Those credits are distributed back to the customer in monthly increments, allowing the business to spread out the cash flow over time, while also drawing the customers back in for repeat sales.
The model drew the attention of Rachel Miller Munzer, the owner of Mamaleh’s, State Park, and Cafe Du Pays in Cambridge. In her 15 years of doing business, she’d used a bevy of different methods to raise money: private investors, bank loans, equipment loans, short term capital loans, and other crowdfunding platforms. But now, she said, bank loans are hard to come by and other fund-raising tools require a ton of work.
“Banks don’t want to lend to restaurants, even those that they love and have long relationships with. And probably less so now than ever,” she said. With NuMarket, “Ross is handling everything logistically, and from the business owner’s perspective, them facilitating [the credits] makes it really easy.”
NuMarket works such that a business only gets the funds if it hits its goal, and the platform only takes its service fee if that mission is accomplished. Mamaleh’s goal to hit $180,000 is ambitious, particularly since they’ve already signed a lease for their new space, Miller Munzer said. But it’s also already getting traction: Just a few hours after it launched, the fund-raising campaign had already raised over $12,000 from 90 supporters, and Chanowski said he’s been fielding inquiries from a slew of interested small businesses.
NuMarket is launching as an alternative to sites like Kickstarter, which attracts early supporters by offering a reward based on the size of their investment, or GoFundMe, which uses a donation model for fund-raising. And it comes on the heels of a cluster of equity crowdfunding startups that have arisen since the Securities and Exchange Commission began allowing companies to let common folk invest in their concepts, instead of just angel investors or venture capitalists.
Salem-based MainVest, for example, has been enabling small businesses, from breweries to cookie bakeries, to get financial support from backers in exchange for a portion of their future revenue. During the pandemic, it has been helping businesses like the Great Scott music venue raise funds to plan a comeback from a COVID-19 closure.
But Chanowski said that NuMarket is different in that it awards credits and not equity or securities to its investors. That makes it more accessible to more people and businesses, he said.
“A lot of businesses are looking for a meaningful connection to customers through this difficult time,” he added. “We’re creating an inextricable, meaningful link between the two.”