Portland footwear startup Mise is raising money through small business bonds to keep up with demand for its shoes designed for restaurant workers.
Mise is raising a maximum of $124,000 by selling bonds on the platform SMBX. So far, $95,330 has been invested with 16 days left in the campaign. The bonds have a 36-month maturity and fixed interest of 11%.
Founder and CEO Erik Hernandez’s reason for turning to an alternative lending platform is a common one for startups.
"They offered up the opportunity when other traditional lenders were uncertain or using traditional algorithms to calculate whether we were viable for a line of credit or a loan," he said. The company was even denied a Small Business Administration loan as it was in contact with SMBX.
"That was hard. Our CPA and advisers were fairly certain the SBA, if anyone, could get us something," Hernandez said. "Getting this opportunity was a huge deal."
Mise makes shoes that are designed for chefs and others in the hospitality industry who spend their days on their feet. The modular shoes are made for comfort, style and ease of cleaning and care.
The company’s first batch of 3,000 shoes arrived last fall, after delays due to pandemic factory shutdowns in Asia. The company began social media ads in November and soon sold through 80% of its inventory.
Its second shipment of 3,000 pairs of shoes, 3,000 insoles and 1,500 outer shells are in transit right now. The capital raised in this bond sale will ensure inventory is ordered before the current batch sells out.
Initially, Mise aimed to raise a total of $75,000. It hit that goal in 10 hours and was the fastest raise SMBX had seen. The platform came back to Hernandez and offered to boost the target.
The company was started in 2020. Hernandez is a footwear industry veteran and is also a designer at Studio Noyes, which works with big footwear brands. The other full-time Mise employee is Director of Business Haehee Joung-Phillips, who has deep restaurant industry ties from her former role as chef and culinary experience manager with Feast Portland. The team at Studio Noyes also augment the Mise duo.
The company received its first run of product last year and was filling preorders and ramping online sales. It had 2022 revenue of $186,622.
Hernandez noted the company had two and a half months of profitable sales but banks were looking for three months of profitability. He plans to use the bond sale proceeds to increase the next purchase order and try to hit the higher level of predictability traditional lenders are looking for.
So far, the company has been funded through Hernandez cashing in his retirement and a $150,000 loan from Micro Enterprise Services of Oregon.
SMBX is a San Francisco-based crowdfunding platform. But instead of selling equity in a business or offering marketing promotion, it allows non-accredited investors to lend businesses small amounts of money. The platform is registered with the Financial Industry Regulatory Authority and businesses on the platform have been vetted. Bonds on the platform can be bought and sold on the SMBX marketplace.
Since SMBX launched in 2020, nine Portland-area small businesses have used the platform to raise a total of $1.1 million. Companies using the platform range from Bratton Construction, a construction business that raised $271,040; Better Bean, a food manufacturer that raised $66,990; Culmination Brewing, which raised $400,000; and Community Co-Pack, a food and beverage contract manufacturer that raised $99,040.
Accessing capital can be common challenge for startups. For those that produce a physical item, the problem can be complicated by inventory needs. At Built Oregon, which coaches product startups across the state, the team works to help founders understand financing options, said Rick Turoczy, who oversees its accelerator.
"It’s not just venture capital, like popular culture would have you believe,” said Turoczy, general manager of the Portland Incubator Experiment. “Platforms like SMBX provide another viable option for our founders to access the capital they need while also giving them the opportunity to engage the community to share in their success and growth."
Mise is an alum of the Built accelerator.
"It’s that community angle that makes these sorts of bond sales especially compelling for Portland startups, because it directly aligns with our ‘buy local’ ethos of supporting our homegrown companies," Turoczy said.
