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I was recently introduced to SMBX by a colleague and he asked me to take a look at the platform. SMBX is a crowdfunding platform that allows small businesses to raise money while also allowing everyday people to invest in local businesses for as little as $10. I have not been a big investor in the crowdfunding sector, so I had not heard of them, but it turns out they have been in business since 2016. I also think it was smart for them to trademark the name “The Small Business Bond.”
Who is Behind SMBX?
Whenever I look at an investment, I really like to see who is behind the company. The company is led by Ben Lozano (CEO/Co-Founder) and Jackie Chan (COO/Co-Founder), both with respectable backgrounds per their LinkedIn profiles. I was encouraged to see that this company is backed by several solid VC firms including Yard + Haka (Upgrade, Robinhood, coinbase), Ironfire Ventures, and Berkeley Skydeck.
Signing Up for SMBX
Like most sites, signing up was fairly simple. I visited the home page and from there, I clicked on the “Start Investing” button in the upper right. I would have thought that was the sign up button, but that appeared on the next page.
Being a genuine investment portal, it did require my legal name, address, and also asked me several investment related questions as follows:
- What is your estimated annual income?
- What is your estimated net worth?
- Are you an accredited investor?
- How much have you invested in crowdfunded offerings in the last 12 months?
Additionally, there was a disclosure statement to sign essentially stating that I understood my investment was at risk and that any business that I invest in could potentially fail. Once I completed this, I received a confirmation email to confirm my account.
Starting My Investment Journey with SMBX
The first thing I had to do was add a source of funds. I noticed that they charge a 4% fee for credit card transactions and no fee for connecting a bank account, so I opted for the bank account option. SMBX uses Plaid to connect to your bank account, which is used by many other companies as well, although I am always leery of having a system connect to my bank (that’s just my security-conscious mind). I have two-factor authentication set up with my bank, so that is an extra layer of security for the connection.
One other feature that I noticed was the ability to remain anonymous. I am a pretty private person, so I like this feature and I like that anonymous was the default setting.
Choosing an Investment on the SMBX Platform
This is where it gets fun. Choosing your investment is one of the most exciting aspects of investing via crowdfunding. You can choose a business where you align with the mission and vision, or you can simply choose a business whose product you like and want to root for, or you can back people you want to see win.
When I look at an investment, I like to keep it practical and ask myself how likely it is that this company will succeed given the high failure rate of businesses in general. The nice thing about a platform such as SMBX is that you can keep your risk level low by investing as little as $10 in a business which is in the form of a small business bond. The downside is that if there is massive growth by the company, you won’t share in much of the wealth if you have only invested $10.
I am only sharing my journey, so this should not be construed as investment advice. Everyone needs to do their own due diligence and make a decision based on their own. I will give this investment advice; never invest money that you can’t afford to lose and never invest money that you need to pay your monthly bills. Investing should be done out of your surplus money, after all of your bills are paid.
When looking at specific companies to invest in within the SMBX platform, there are a few things to take note of:
- The Duration – This is how long it will take to get your money back.
- The Term – This is the interest rate you will earn on your money.
- Comments – You can see questions others have asked the owners and how they respond. You can also ask your own clarifying questions.
Once you make your investment, you actually have 48 hours to cancel your order if you change your mind. That is a nice feature as that is not an option with many other types of investments.
Your bonds are issued within 5 business days after a project funding is completed. Bonds are not issued unless and until the project funds.
How does SMBX Make Money?
As an entrepreneur, I am wired to ask this question. It is a question I ask often when looking at investments because I want to know that the company I am working with will be in business for the long haul. They earn their money by administering the bond investment program for the small business owners who use the platform to raise money. They do not make money off of the investors, as they are paid back directly by the business owner through the platform.
How Can Small Business Owners Leverage SMBX?
Are you a business owner looking for funding for your business? Perhaps the SMBX crowdfunding platform is an option for you. The minimum raise amount is $25,000 and you can go up from there, well into the 6 figure range. Additional benefits of using this method of fundraising including marketing exposure and the ability to grow your customer base through advocates who have a vested interest in your success.
Is SMBX The Right Investment Platform For You?
Only you can determine what is a good investment vehicle for you. I do not give investment advice as I am not a financial advisor. My general financial advice is to not invest what you cannot afford to lose. Keep in mind, people lose money in stocks and other investments, so there is almost always a risk of loss – unless you are earning a very low interest rate a a bank – and even then, you are only protected up to a certain amount.
I see platforms such as SMBX as one where you can put your money where your passion or heart is, and in the end, it might pay off financially. Even if you totally lose your investment, you will have the reward of having helped an entrepreneur pursue their dream – and that in itself is rewarding. As for me… I am rooting for a couple of guys in California that are launching a food truck to sell their amazing wings!
If you want to get started with SMBX, click here to register.