After about two years of pandemic-related delays and disappointments, Humphry Slocombe, San Francisco’s “adult ice cream” company, finally opened its first location — and fifth overall — on the peninsula this week.
“Quite frankly, it was a relief,” CEO Jina Osumi said of the proverbial ribbon cutting. “Early sales show this will be a great store and the neighborhood has welcomed us with open arms.”
What went surprisingly well was securing financing for the new store, usually a stumbling block for small businesses reeling from the pandemic.
Instead of relying on a typical bank loan, Humphry Slocombe was able to raise $250,000 from 180 individual investors by offering “small business bonds,” a new financial product created by SMBX, a 35-person startup in San Francisco.
In 2020, when Humphry Slocombe sought to raise funds for the new Redwood City site, the banks largely turned them down. The lenders calling them back offered money, but at exorbitant interest rates.
“Rather than the bank, I prefer to borrow from those who believe in our business and are enthusiastic about supporting our business,” Osumi said. An added bonus was that there was no need for a personal guarantee, a tax trap that can trap optimistic entrepreneurs in personal bankruptcy or foreclosures.
In 2012, the adoption of the JOBS law opened up the possibility for private companies to issue public securities. SMBX was created to provide access to capital without requiring entrepreneurs to give up their equity. Since its launch in February 2020, approximately 70 businesses listed on the SMBX platform have raised over $6 million to help support and grow their businesses.
“Our vision was really about creating a new public marketplace for small and medium-sized businesses,” said SMBX CEO and Founder Ben Lozano.
Lozano, who has spent more than 15 years in academia and describes himself as a “recovering professor of finance,” saw the difficulties small and medium-sized businesses face in accessing capital as the son of an expert- Southern California Chartered Accountant.
“Historically, small companies that wanted to finance themselves with debt really had only one option, while larger companies like Coca-Cola can issue bonds in the public market.”
Basically, a bond is a type of debt financing that takes the form of a loan from an investor to an organization – in the case of SMBX, a small business – that is repaid over a set period of time with interest. In the case of Humphry Slocombe, the company sold $250,000 of bonds at 8% interest with a five-year repayment term.
Here’s how it works: Interested companies work with SMBX, which analyzes their financial history and develops a risk profile. Then the startup performs additional due diligence checks to ensure that they are “in all likelihood, barring disaster, able to service the debt,” Lozano said.
From there, the “mandatory” offers are available to anyone with a credit card or bank account to purchase. Investors have the option of investing as little as $10 in the business, although most opt for much more: typical investors are business customers, community-minded individuals looking for a way to support their communities or experienced small business investors. Once the offering closes, the redemption plan begins, with investors guaranteeing a certain return over the life of the bond.

SMBX charges set-up fees equivalent to approximately 4% of the total supply. The startup has raised $15 million from investors including Group 11, Better Ventures and Impact America Fund.
To date, SMBX has not experienced any bond defaults, although Lozano acknowledged it was only a matter of time. For now, the company is trying to avoid this possibility by carefully vetting the companies listed on the platform.
As for Humphry Slocombe? They stay busy picking up flavors like Vietnamese Iced Coffee and Secret Breakfast (bourbon + cornflakes) for Bay Area customers. But if they ever needed to go back to the pit for more capital, SMBX would top the list.
“I don’t know if any loan could be considered fun, but if any loan could be fun, this would be it,” Osumi said. “You get the same funding at the same rate, but the money comes from real people who get paid back, rather than going into a bank’s black hole.”
Kevin Truong can be reached at [email protected].
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