How Foundations Investing in Small Businesses can Help You Invest In Small Businesses!
Honeycomb has recently built some pretty valuable relationships with some philanthropic foundations investing in Main Street. Foundations like the A.L. Mailman Family Foundation, Souls Grown Deep, and the Jesse Ball DuPont fund are making it easier for small businesses of all kinds to grow.
But, just because there are big foundations backing these small businesses, that doesn’t mean your investment doesn’t matter! In fact, having these foundations on our side can help both the small businesses and you - read on to learn more.*
*This blog post is for educational purposes only and should not be taken as investment advice. Investing is inherently risky, and investors should be prepared to lose some if not all of the investment.
How are foundations helping small businesses?
When Honeycomb works with foundations, we often form an agreement with them called a Loan Participation Fund. What this means is that a foundation sets aside a sum of money that they plan to invest in small businesses that fit their criteria. For some, it’s regional - they’ll invest in any small business running a Honeycomb campaign that’s in their city. Others have a social mission. Souls Grown Deep, for example, invests in Black-owned businesses in the South.
These foundations will then invest a sizable sum in the businesses that meet their criteria - usually around a $10,000 investment. This is HUGE for many of the small businesses that benefit from this. It builds momentum for their campaign, encouraging more investments, and also makes it more likely that they’ll hit and exceed their minimum fundraising goal.
What does this mean for me as an investor?
Well, to reiterate what we just went over, foundation investing really helps to set up the small businesses running campaigns up for success.
Often, small business owners who might have strong businesses but perhaps lack the social capital necessary to run a blockbuster crowdfunding campaign fail when they otherwise could grow.
The foundation’s investment helps to mitigate that risk by investing a large sum and encouraging more investment as a result. It means that small businesses in demographics where their neighbors may not be able to afford to invest in them, or may not know how, have the ability to use our platform and be successful on it! Furthermore, it allows small businesses to raise more money than would otherwise be possible without the foundation’s investment - this means they have more money to work with and be able to grow their business with, instead of having to piece together the rest of the funding they need from other sources.
For you as an investor, it means that once you perform your own due diligence (which you can do by reviewing the investment materials and asking the business owner questions), you can be more confident in investing in a small business. It’s more likely that they will hit their minimum funding goal and your investment will be put to use. Plus, the business has the ability to raise more money than perhaps possible before, which sets them up for success.
How do I know a business is eligible for foundation funding?
When you go to our Live Campaigns page, there are now a variety of tags that tell you at a glance what you need to know about the business, located right below the business’s name. If it says “Matching Funds Eligible,” you know that that business is eligible for foundation funding!
Here’s what it looks like:
Small Business Investors like You and Foundations can work hand-in-hand
Investing in small businesses has never been easier thanks to Honeycomb and thanks to the foundations who support small businesses. Browse live campaigns now, and keep an eye out for those eligible for matching funds!