Equity Alternative Revenue Note | MainVest

Why an EaRN note?

Traditionally, small businesses access capital through self-funding (or bootstrapping), taking loans from friends and family, taking loans from financial institutions, or, in rare cases, giving a percentage of their company to investors as equity. These traditional investment vehicles are rigid and each come with their own benefits and shortfalls.

Drawbacks to Traditional Debt Investments

Traditional debt investments are purely return-based investment vehicles, with little to no ownership or partnership between the investor and the business. The investor’s return isn’t tied to the business’s success, which leaves little incentive to actively help the business succeed. Most small businesses get their capital from a debt instrument via a financial institution. Examples include a small business loan, a personal loan, or a line of credit tied to some form of collateral.

Drawbacks to Traditional Equity Investments

Traditional equity investments are designed to foster a shared ownership of a business, with investors and business owners all profiting from success. The traditional equity model, however, doesn’t make sense for small businesses and local investors. Investor returns can’t be facilitated until the private company has a “Liquidity Event”, most commonly an acquisition or an IPO. This makes it incredibly challenging for an investor to see a return on an equity investment into a small, private business.


To solve for these challenges, we went out to built a better mousetrap. A financial instrument that is in essence a debt instrument, but inherits many of the positive traits of equity, both for the investor and entrepreneur. MainVest’s mission is to create a world where communities can grow and prosper through a rich ecosystem that benefits everyone, not just the super-rich. The EaRN Note enables communities to make targeted investments in local businesses, letting everyone share in the success of economic growth.

Pre-Liquidity Returns

Traditional debt investments are purely return-based investment vehicles, with little to no ownership or partnership between the investor and the business. The investor’s return isn’t tied to the business’s success, which leaves little incentive to actively help the business succeed. Most small businesses get their capital from a debt instrument via a financial institution. Examples include a small business loan, a personal loan, or a line of credit tied to some form of collateral.

Stakeholders, not just Cash

Traditional equity investments are designed to foster a shared ownership of a business, with investors and business owners all profiting from success. The traditional equity model, however, doesn’t make sense for small businesses and local investors. Investor returns can’t be facilitated until the private company has a “Liquidity Event”, most commonly an acquisition or an IPO. This makes it incredibly challenging for an investor to see a return on an equity investment into a small, private business.