I’m not sure if you’ve ever been to Mission Cheese in SF but Maker’s Common will be a larger, more developed version of the American cheese and charcuterie bar concept. It will feature domestic, small production goods in both our eatery and market, focusing on cheese, charcuterie, beer, wine, and family-style meals. We have a big focus on supporting small producers, as well as creating a great workplace, and becoming a community gathering hub.
WHAT IS A DPO?
A Direct Public Offering (DPO) is best described as investment crowdfunding. A DPO allows a company like ours to advertise an investment opportunity to any and all potential investors within a single state. Or, as we like to say, “It’s like crowdfunding, but all grown up.” Find out more from the experts here.
WHY CHOOSE A DPO?
After considering multiple sources of financing, we believe a DPO is the best investment vehicle for a small food business like ours. Here’s why…
• We want to pay you interest, not the bank
• We build a community of supporters before we are open
• We provide a local investment opportunity that is an alternative to Wall Street
• We help keep money in the local economy by paying interest to California residents in the Bay Area and beyond
WHAT IS SO INNOVATIVE ABOUT DPO?
A DPO is the only way that a company like ours can publicly advertise an investment to a huge pool of potential investors, both accredited and unaccredited. This allows us to leverage the power of crowdfunding while offering an investment return.
IS IT RISKY?
There is risk in every investment and this is no different, as Maker’s Common is offering notes that are unsecured against bankruptcy. This risk is offset by the fact that, at 4%, we are paying 4.0x the return of the best savings account in the country and 2.5x the rate of 7-year US Treasury bonds. Similarly if you look at the Dow Jones index for comparison you’ll see that over the last two seven-year periods, the average annual gain was just slightly below 4.0%, which is less than you would earn by investing in Maker’s Common. (And this doesn’t include any management fees or trading fees you would have incurred along the way!)
An investment in Maker’s Common diversifies your portfolio, builds local economic resilience, strengthens your sense of place in your community, and supports an economy of local, organic, small production, delicious food. All investments are about risk, but with most investments, you are placing your trust in a faceless organization. With Maker’s Common, you can stop by anytime. Which would you prefer?
WHY DEBT INSTEAD OF EQUITY?
We understand equity can seem sexier to many people, but debt is better for investors, because with equity there is typically no guarantee of payback for up to 10 years.
WOULDN’T IT BE FASTER TO JUST GO FOR A BANK LOAN?
It might be, but bank loans can be difficult to get for food businesses and we also feel strongly that the risk-reward structure is heavily skewed in the bank’s direction. Bank loans require collateral for the full cost of the loan, which means they are taking a 6%+ interest rate with virtually no risk. Finally, we wanted to put our money where our mouth is provide an actual Main Street investment opportunity.
WHAT IF YOU DON’T REACH $600,000? WILL I STILL EARN INTEREST?
Absolutely. It is not an all-or-nothing situation. Interest starts accruing as soon as your funds are deposited, and is paid annually 75 days after the end of each calendar year.
WHAT IF I NEED MY MONEY BACK EARLY?
We are aware that 7 years might seem like a long time for some, which is why we’ve built in the option to request principal payback after 3 years. We have limited those requests to $50,000 per year, so as to maintain a healthy cash position, but this should allow exits for those that need their capital to do work for them elsewhere.
CAN I INVEST THROUGH A TRUST OR AN IRA?
Yes, trusts and self-directed IRAs are great vehicles for this investment.
ISN’T THE BAY AREA RESTAURANT SCENE SATURATED? WHY IS MAKER’S COMMON UNIQUE?
Despite the multitude of restaurants, the three of us, many Mission Cheese patrons, and numerous people we’ve talked to still find it challenging to find a place that:
• serves delicious food based on local ingredients
• is casual and comfortable yet beautifully designed
• has everyday prices
• focuses on the connection to producers
• is open for lunch and dinner and is friendly to families
We think this opportunity is especially strong in Downtown Berkeley.