For many businesses looking for local capital, the fees, disclosures, and legal hassles of regulation crowdfunding are simply not worth it. But there’s another approach that tiptoes around securities laws, commonly called pre-selling. Our interview this week is with Ross Chanowski, founder and CEO of NuMarket, who has been successfully introducing pre-selling to hundreds of small businesses across the country.
During the COVID-19 pandemic, I recommended to my blog readers that they each adopt their favorite small business to help it survive those awful years. My wife and I “adopted” Busboys and Poets in Washington, DC. We wrote the owner, Andy Shallal, a $1,000 check and told him to use the funds for whatever he needed and just give us $1,000 in gift cards. He was so pleased that he gave us $1,200 in gift cards (which we are still working our way through). That is, we got a 20% return on our investment.
NuMarket takes this simple idea and puts it on steroids. In my mind, one advantage of pre-selling is that businesses can test their customers’ willingness to support them. If a business succeeds with a $50,000 pre-selling campaign, it has more confidence that a $250,000 crowdfunding campaign will work. Moreover, banks will then have more confidence to make a formal loan to the business.
Also, in this issue, you will find our updated list of local investment offerings.
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This week’s interview is with Ross Chanowski, the founder and CEO of NuMarket, who is bringing capital to businesses through pre-selling. As you’ll read, NuMarket also offers a suite of services to the businesses it works with.
MS: Ross, Happy New Year to you, and thank you for talking with us. Tell us about NuMarket. When did you start it, and why? And how does it help small businesses?
RC: I started NuMarket in 2021, mid-pandemic, to provide small businesses with a new way to access capital. NuMarket is rooted in community-based funding, which means it’s open to anyone who wants to invest in their real community. Traditional financing is hard for small business owners to come by, and it’s often not designed for their sustainability and profitability. We think NuMarket’s model can be a tool that helps local communities thrive, where everyone gets more value from what they put in. Small businesses maintain control over their vision, supporters become part of the brand’s story, and communities flourish as local ventures succeed. Ultimately, our mission is to strengthen small businesses by giving them the tools to grow and thrive.
MS: Describe NuMarket’s tools to us more specifically. What steps do you put a business through, and what services do you offer them?
RC: At NuMarket, we’ve built a credit-based funding model for small businesses to raise money directly from their communities. Instead of accepting donations or selling equity, we let businesses invite future customers to fund them in exchange for credits toward future products or services. Supporters are essentially providing funding to the businesses they really want to succeed, and that upfront cash helps the business cover start-up or growth costs without taking on expensive debt.
This structure creates a win-win scenario. The business gets the capital it needs, and the supporters receive actual goods or services in return. It also builds an incredibly loyal customer base because people feel personally invested in the success of the companies they support. As a result, our model fosters a sense of ownership and community. Ultimately, our goal is to help businesses thrive by turning their most passionate customers into their biggest supporters—financially and emotionally.
We work closely and very personally with each business on their campaign marketing. Our team helps with the marketing strategy, ad designs, and templates, all geared toward each specific business. After the campaign is over, we handle all of the credit delivery and tracking so the business can get back to what they need to do, which is running their business.
MS: Why focus on pre-selling instead of raising capital through regulation crowdfunding?
RC: Credits-based funding allows small businesses to tap into the power of their customers and supporters for financial backing, creating stronger relationships along the way. It’s a model that benefits both funders and businesses. For funders, there's no need to be an accredited investor or have a financial background—anyone can participate. Instead of long payoffs or potentially risky investments, the credit-based model effectively earns funders 20% more in credits in under a year. As long as the business remains open, funders can use their credits to access all of that value.
For businesses, a NuMarket campaign minimizes the hefty time and resource costs of equity crowdfunding. This means owners can focus on their business rather than paperwork. In the long term, these funders often become the businesses’ most loyal customers. This makes the NuMarket funding one of the business’s best marketing tools. Ultimately, the credit-based model fosters deeper community engagement, making the entire process more efficient and valuable for everyone involved.
MS: Your website suggests that you stay involved with companies long after the crowdfunding campaign is done. What does that engagement look like?
RC: First and most importantly, we manage the delivery, tracking, and customer service that goes along with our credits. In the past, using rewards-based crowdfunding often meant a big time and financial burden on the business. A funder may have given some money in exchange for a personalized t-shirt or a birthday party. Managing and delivering those rewards is a challenge. With NuMarket’s credits model, the business doesn’t have to do any of that.
Outside of that, we like to be both reactive and proactive in helping the businesses we support. Reactivity might look like connecting the business to a real estate broker for its next location or suggesting an accountant who can help with their growth. We also love to promote what our business community is doing with events and community engagement. For example, we’ve started co-hosting coffee meet-ups for NuMarket funders at our customers’ restaurants. This brings new customers to the business and more community-building for funders.
Proactivity is something we’re focusing on a lot in 2025: What ways can we help businesses when they didn’t know help was possible? That looks like negotiating partnerships and discounts with service providers, sharing cost-saving information, and organizing more community amongst business owners themselves. Right now, we’re working with other financial institutions to provide follow-on funding to businesses at rates they typically wouldn’t have qualified for in the past. Being able to add more pieces to the financial puzzle for small businesses is a big goal of ours.
MS: You say you’ve helped several hundred businesses. What is the range of raises you’ve carried out?
RC: So far, we’ve seen three main types of campaigns in the range of $200,000, $50,000, and $10,000. The high-end tends to be a business with one or two locations, growing their business into a new space after several years of serving their community. The middle range is usually a newer business, securing new equipment or building out their space. The lower range is often pop-ups going permanent or new businesses taking a more significant step in their growth. The average contribution size per person in each campaign is about $180, which we find incredible.
MS: My understanding of securities law is that in some states, pre-selling to start-up businesses is considered a security. How do you handle this?
RC: In our case, campaigns are essentially selling “promotional credit” for businesses that are already up and running in some capacity. Each businesses using NuMarket’s service already has something they are selling that contributors can use their credits to purchase. In some cases, that might be a restaurant opening a new location where credits can be used immediately at the original location. In others, businesses may use funds for new equipment, like a state-of-the-art oven that expands their menu. Until that oven arrives, credits can be used towards their existing products.
MS: Got it. So why the focus on food businesses? And are there other sectors you might try this with as well?
RC: One of our customers in 2021, in the middle of the pandemic, sat me down over coffee and said that NuMarket was filling a gigantic need in the food and drink world. Having been in the food world before starting NuMarket, I knew she was right. That said, we plan to expand to other types of businesses soon. I know I would love to get credits at my favorite bookstores, salons, gyms, studios, and shops. The need local businesses have for additional funders is clearly there, and I believe we can fill it.
MS: Your business model is not completely unprecedented. For many years, Credibles has helped raise capital for food businesses through pre-selling. How would you differentiate your business model from Credibles’?
RC: Let me say, first, that we want to be a part of the ecosystem that provides real support for small businesses. When a business isn’t the right fit for NuMarket’s model, we’ll recommend other platforms or tools that others might see as our competitors. One of our differentiators is that we offer a variety of services to our businesses, from campaign success and credit delivery to long-term marketing and community building.
MS: What’s the geographic focus of NuMarket?
RC: We got our start in the Northeast and then found some strong business communities on the West Coast and Midwest. In 2025, we’re looking forward to serving the whole country. Our focus is twofold: serving the areas where we currently operate and making sure we have the tools in place to expand our focus geographically and service-wise.
MS: You mentioned that you’re beginning to have relationships with local financial institutions. What does this look like?
RC: Other financial institutions are taking notice—not just of NuMarket—but of the success of the small businesses we serve. We’re working behind the scenes with local banks, credit unions, and CDFIs to set up follow-on funding for NuMarket businesses. A NuMarket campaign provides a proof point to a lender or underwriter: If hundreds of future customers are willing to fund a small business, it’s pretty likely that the business will have longevity and success in the future.
MS: What is your own business model? How much capital did you yourself need to raise, and how did you raise it? Are you profitable now?
RC: Our business model is simple. We believe in “mutual value,” meaning that everyone who participates in our model gets back more value than what they put in, including us. We take 12% of the funds raised and don’t have upfront fees or subscription fees to handle the credit delivery. So far, we haven’t raised any outside funding, but we have grown our revenue steadily and are operating efficiently. We haven’t closed the door on trying out some new financing models for our own business, but we are happy to be growing independently and on our own terms right now.
MS: Finally, how do you yourself invest locally?
RC: Funny you should ask because I just looked at my NuMarket dashboard this morning and saw that I had new credits to use all over the country. I’ve been on the road almost constantly since the pandemic started, and for me, local covers much of the US. So, instead, I’m investing in independent businesses. I just used my credits on a shipping order from Reclamation Foods, based in New York, to where I’m going to be living in California for a few months. I’m also often popping into Mamaleh’s in Boston to buy sandwich platters for my family and using credits. I’m looking at using credits on the West Coast this year.
Our Latest MSJ Extra! Interviews (Read all of our past interviews here.)
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NEW INVESTMENT OPPORTUNITIES
Below is our list of recently posted investment opportunities across the United States. Please note that our listing of these opportunities is not an endorsement, and remember that all investments are risky, so click on the hyperlinks and read all the details carefully before investing. Over time, we plan to add more commentary around these listings and tools to help you become a successful local investor. Please let us know your ideas!
To access our complete listings of local offerings on our website, please create a free account here.
INVESTMENT OPPORTUNITY SPOTLIGHT
Bellevue Montgomery (Memphis, TN) - Small Change: Pocket neighborhood project to address this gap in the Medical District with much-needed "Missing Middle" housing.
COMPREHENSIVE LISTINGS
Click the images below to see our complete list of investment opportunities by theme or region.
NEW OPPORTUNITIES
ENERGY INVESTMENT OPPORTUNITIES
FOOD INVESTMENT OPPORTUNITIES
HOUSING INVESTMENT OPPORTUNITIES
INVESTMENT OPPORTUNITIES BY REGION
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✔️ Mid-Atlantic
✔️ Midwest
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✔️ Rocky Mountains
✔️ South
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GRASSROOTS INVESTOR FUND HIGHLIGHT
Genesis Fund, Inc. (Brunswick, ME): Affordable housing and community projects (Open to residents of all states except AR/CT/FL/MS/NE/PA/TN/VA)
FUNDS OPEN TO GRASSROOTS INVESTORS
The following is our first draft of funds that invest in local businesses and are open to non-accredited investors. Please help us add to this list!
(Fund Types: BC = Short-Term Business Credit Institution; NP = Nonprofit; RE = Real Estate Investment Fund)
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