- Entrepreneurs – experience, gender, ethnicity
- Hospitality Industry Segments – Restaurants, Consumer Goods, Hospitality Technology
- U.S. Markets – not limited to metropolitan areas
- Funding Pathways – debt and equity opportunities
- Business Stage – emerging, seasoned, enterprise
- Restaurants: Full-Service Restaurants (FSR) and Quick-Service Restaurants (QSR)
- Consumer Goods: Consumer Packaged Goods (CPG) and Direct to Consumer Items (DTC)
- Hospitality Technology: Software as a Service (SaaS) and Innovative Hardware
- Background Check: Using industry-leading platforms, we conduct in-depth background checks on the company and the entrepreneur(s).
- Track Record Review: We confirm the company has successfully executed projects in the category they are looking to bring to the HMx platform. If they don’t have a track record in the same category, we evaluate their track record in their core business(es) and identify potential blind spots and risks for entering a new category.
- Company Designation: We put each company into one of the following categories based on their background, experience, and brand: Emerging, Seasoned, Enterprise.
For Seed campaigns, the following criteria must be met:
- Restaurants (FSR/QSR): TBD
- Consumer Goods (CPG/DTC): TBD
- Hospitality Technology (Saas/Innovative Hardware): TBD
For Growth campaigns, the following criteria must be met*:
- Restaurants (FSR/QSR): At least (1) operating unit and one year of financial operating statements and cash flows to verify performance.
- Consumer Goods (CPG/DTC): At least 6 months of sales volumes online, in-store, vending or via farmers market sales; (for kitchen gadgets) a prototype in production and supply chain partners secured.
- Hospitality Technology (Saas/Innovative Hardware): A prototype in production and/or supply chain partners defined.
*We offer an exception for existing restaurant groups or individuals with significant industry track records that wish to issue securities for ‘new concepts’.
Additional criteria include:
- The offering is within a core competency of the company.
- The business plan and supporting materials demonstrate professionalism and follow industry standards.
- The business plan and offering terms are supported by market data.
- The offering aligns with HMx investor preferences in terms of brand, category, security type, and geography.
How We Screen and Don’t Screen Issuers
Under regulations issued by the SEC, we are required to:
- Have a “reasonable basis” for believing that every Issuer on our Platform is eligible to offer its Securities on our Platform and is complying with Title III. We might perform our own due diligence, but we are generally allowed to rely on the representations of the Issuer.
- Have a “reasonable basis” for believing that every Issuer on our Platform has established means to accurate records of the holders (owners) of its Securities. Again, we might perform our own due diligence, but we are generally allowed to rely on the representations of the Issuer.
- Deny access to the Platform to any Issuer if:
- We have a “reasonable basis” for believing that an Issuer or any of its officers, directors, or beneficial owner of 20% or more of its outstanding voting securities is subject to disqualification under the rules discussed under “Disqualification of Issuers” below. We are not allowed to rely solely on the Issuer’s representations to form this “reasonable belief,” but must conduct background checks with third parties.
- We have a “reasonable basis” for believing that the Issuer or the offering presents the potential for fraud or otherwise raises concerns about investor protection, or we can’t effectively assess the risk.
We will comply with all those requirements. But we are not required to conclude that Issuers on our Platform represent good investments for investors. In fact, we are not even allowed to tell you if we think that one Issuer is a better investment than another Issuer. You have to make those decisions on your own.
Disqualification of Issuers
Title III may not be used if the Issuer or certain other people have been the subject of certain disqualifying events during the last 10 years.
The “certain other people” are:
- Any predecessor of the Issuer;
- Any director, officer, general partner, or manager of the Issuer;
- A person owning 20% or more of the Issuer’s voting power;
- Any promoter associated with the Issuer;
- Any person who will be paid for soliciting investors; and
- Any general partner, director, officer, or manager of such a solicitor.
The “certain disqualifying events” include a long list of events, all involving improper actions in the securities business – for example, the conviction of a felony or misdemeanor in connection with the purchase or sale of any security, or the loss of license of a securities broker for misconduct. As explained above, we will conduct background checks before allowing an Issuer to list on our Platform.