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Based out of Chicago, Bolstr is a fundraising platform or marketplace where growing consumer, retail, and manufacturing businesses can raise funding for expansion from serious investors. Their goal is empowering businesses to expand by providing free access to investors and information on how to grow a successful enterprise.
This is done through what they call “The Vault”, Bolstr’s free online publication. Once signing up for the Vault newsletter through Bolstr’s website, readers get access to actionable advice, experiences and lessons learned from real experts who have built and scaled consumer, retail and manufacturing businesses.
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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.
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).
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:
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.
Bolstr is a bit more restrictive in its operations than other crowdfunding platforms. It is not for the casual fundraiser or startup. You must be serious about your business and have your plan of execution already in action. This means you are incorporated with the necessary state and federal entities and have already launched the business, seeking to expand. Unlike many crowdfunding platforms, you cannot simply sign up for an account and start fundraising. Bolstr vets their fundraisers with a detailed qualification process before they can launch a campaign.
Bolstr utilizes an all or nothing fund type. This means that businesses who are unable to reach their funding goal by the deadline will not receive any of their funds. Many other platforms function on a keep what you raise basis, allowing users access to whatever funds they are able to raise through their platform. The all or nothing fund type may be frustrating to businesses who fall short of their overall funding goal. This can be especially frustrating in cases where the company only falls short of their goal by a miniscule amount.
Also important to note is that a business raising funds on Bolstr must have a business bank account. Other fundraising platforms only require a Paypal account or other merchant account. This certified business account is where monies will be electronically transferred to once fundraising ends. This is why you must be a verified business to enter your campaign on Bolstr's marketplace. To ensure this is a verified account, Bolstr performs two small micro-deposits up-front, within 1-2 days of the linking of your account. Once the account is verified, funds can be moved accordingly. This is not a "bad" feature (as it protects all parties involved); however, it is restrictive to businesses struggling to get off the ground. Becoming an "official" business is expensive with the paperwork that it entails.
If campaigning on Bolstr, a business has to go big or go home. Unlike many fundraising platforms that have flexible deadlines of up to 45 days (or more), each Bolstr campaign runs for a maximum of 30 days, though most close within a week.
Bolstr's campaigns are structured to be highly targeted. If a campaign does not reach its intended goal within 30 days, the campaign will close unsuccessfully. If the campaign is unsuccessful, the business will receive none of the investment capital that was contributed. This is not necessarily a bad thing, it just is not a great option for neophytes just getting their feet wet or those needing more time to raise funds.
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The most disappointing aspect of my experience with Bolstr is the management. First off, poor responsiveness: any email reply from Charlie or Larry typically required multiple inquiries, and many of my emails have still never been answered. Second, there was effectively zero effort to collect on a delinquent investment. Forget about the so-called "owners guarantee" where a business owner signs up to be liable for any business failure - when an investment of mine failed (minor, about $3.5K), this option was never even brought up. In fact, my failed investment was featured prominently on the Bolstr website long after the business owner was in default. On a related note, their website section "Sucess Stories" is conspicuously blank as of today (2/24/18). Overall, I'm not sure Larry and Charlie know the meaning of the word "transparency" - I had to send multiple emails to get any idea of what was going on with my investment. Also, forget about efficiency - expect to wait until March or April for the simplest 1099-INT (after pushing them). I have had much better experience with similarly structured investments at Localstake or Startwise, which I recommend instead. Avoid Bolstr.