Mainvest, a FINRA-regulated funding portal, is ceasing operations.
According to the platform’s website, the firm has raised over $30 million for issuers since its inception.
A pop-up on the Mainvest website also states that payment processing is currenlty unavailable:
“Due to the ongoing dispute between Evolve Bank and Synapse, all payment processing on Mainvest is currently unavailable, including withdrawals and bank linkage. Learn more here. We will be notifying all users via email as updates become available. For more information refer to the Investor Support Hub or Business Support Hub. Note that all portfolio information will be emailed to investors no later than June 12th, 2024, and repayment information will be provided to issuers no later than June 12th, 2024.”
The Evolve/Synapse issue appears to be separate from the closure of the firm but this may be impeding withdrawals for impacted investors.
In an X, Mainvest claims:
“Firstly, the situation between Evolve and Synapse is something we’re paying close attention to, and we’ve contacted both firms, outside counsel, FINRA, and regulators to try and get this resolved and processing unlocked ASAP.”
“Mainvest’s closure has no bearing on the enforceability of agreements and issuers are responsible for continuing payments. Reach out to support for specific questions about your portfolio (we’re checking that way more often than social media).”
One apparent investor claimed that Mainvest had “enabled a run on the bank.”
@theMainVest my investment funds (although small) belong to me. Where is it? You essentially enabled a run on a bank which with logical thinking applied would have been obvious. Where is my money? @BosBizEditor @business #mainvest
— Jermaine Nicole (@jermaine5821) May 16, 2024
In the Investor Support Hub, Mainvest had this to say:
“Unfortunately, after exploring all available alternatives, a mix of internal and external factors have led us to the difficult decision to cease Mainvest’s operations and dissolve the company. This closure is a heavy loss for our team emotionally, financially, and in time invested, but we remain committed to an orderly wind-down in the best interest of our platform users. In this Q&A, we aim to answer your questions relating to our closure.”
The page provides a timeline of anticipated events pertaining to the closure of the platform. The Mainvest website is expected to be “deprecated” on June 14, 2024.
In a blog post on LinkedIn, crowdfunding entrepreneur David Duccini, CEO of Silicon Prairie, said he had called out the “unsustainable payroll” in a funding round for the firm. He shared a copy of the Mainvest income statement, which showed a net loss of over $2.5 million in 2021 and another loss of $2.08 million in 2022.
The failure of Mainvest highlights a challenge withing the securities crowdfunding industry of creating a sustainable environment that generates a profit for the platform. While it is unknown as to how many securities crowdfunding platforms are profitable, many industry insiders believe few have turned the corner on profitability. At the same time there many platforms that list very few securities offerings.
