- Model type
- Receiving funds
- Fund type
- Maximum allowed raise
- Administrative work options
Bolstr's business is an Equity Model, what they call a Revenue Share investment structure. This Revenue Share investment structure is designed to help businesses raise growth funding from investors while maintaining equity, and making monthly payments that are proportional to gross sales volume.
This is great for growing businesses because it means they never get squeezed during seasonal sales cycles like with traditional funding. So payouts to investors are "scaled" according to the amount earned instead of a flat rate. This gives a business a better chance to get off the ground or expand to the next level without breaking under the weight of investor debt.
Bolstr is a marketplace, which means the transaction fees and processing fees associated with typical crowdfunding sites are not applicable. This is different from many crowdfunding platforms used by businesses because they keep 100% of the monies they raise.
Businesses keep what they raise from investors and make payouts using Bolstr's Revenue Share investment structure. This means businesses with successfully completed campaigns provide revenue share payments to investors based on an individualized agreement between the business and the investor(s) on the specific percentage-which alleviates the need for transaction fees.
There is no fee for non-completion of a campaign. If a campaign does not reach its funding goal in the allotted time, the campaign will close unsuccessfully. In this scenario, any investor commitments will be automatically canceled. This is good compared to some crowdfunding platforms who charge a non-completion fee.
Bolstr is more of a traditional fundraising model. Businesses use their crowdfunding platform to gain investors, not donators. Most crowdfunding sites work on a Rewards model, where donators give money and receive specified goods promised by the campaign owner, such as a thank you email or coffee cup.
With Bolstr, donors are real investors who are entitled to receive a monetary return on their investment. Individually, each investor is entitled to a pro-rata share of the percentage of revenue, based on the amount of money they contribute towards the fundraising goal. So if an investor puts in the full amount of the fundraising goal, they would be entitled to the entire payout amount. Inversely, if they were to invest an amount less than the fundraising goal, they would be entitled to a pro-rated share of the payout amount.
Maximum Allowed Raise
Businesses are able to apply for funding up to $500,000. Most businesses who have utilized their funding platform reach their funding goal within one week of their campaign going live on their platform.
Payouts to investors are based on this predetermined percentage of revenue. Each month, investors receive a payout based on this predetermined percentage, which is calculated by multiplying the gross revenue generated by the percentage of revenue (i.e. gross revenue X percentage of revenue = investor payout).
Investor Payouts take place at the end of every calendar month until the predetermined revenue percentage is achieved. (In other words, until they have earned back what they've put in).
Administrative Work Options
Bostr takes care of the fundraising administrative work tasks. In fact, Bolstr facilitates the entire process. Businesses just have to send Bolstr their monthly revenue reports. Bostr then verifies the revenue and calculates payment amount due to investors. Then investor will receive the payments in their bank account. Bolstr also provides investors with a 1099 tax form at the end of each year. They do not, however, provide tax advice nor do they handle tax administration tasks for businesses.
At the end of a fundraising campaign, the monies raised (i.e. investment capital) will be automatically transferred from each investors' bank account into a third party escrow account. The business gets a notification to login to their account and electronically countersign each revenue share agreement between the business owner and investors. Once all revenue share agreements have been countersigned, funding will be transferred from escrow into your business bank account.
Before any funds can be received, a (small) business must meet legal requirements to be considered a qualified small business.
Bolstr requires a qualified small business to:
- Be an incorporated legal entity that is in good standing in its jurisdiction
- Provide Bolstr historical financial statements for at least the prior two years
- Not have been subject to disciplinary action with respect to the sale and issuance of securities
- Not have any prior or outstanding bankruptcies or liens.
Businesses will need an attorney to help them navigate the negotiations with investors. Investors cannot walk in off the street, either. They must provide information to Bolstr, enabling a Company and its Attorney to assess suitability for investment, including their income, net worth, and investment sophistication.
A business will not be able to launch a Campaign until they confirm they have consulted an Attorney to advise them on all aspects of the Campaign. The Attorney must, in turn, represent to Bolstr that the business has done so.