A New Way to Invest in Growing Businesses
Groundfloor is launching a new opportunity inside private market investing: SMB Finance. This new offering will focus on revenue-based investing as a way for individuals to participate in private market opportunities.
The new Groundfloor SMB Growth Fund gives accredited investors access to revenue-based investing in proven multi-location businesses through a curated institutional opportunity typically unavailable to retail investors. The fund targets a 13–15% net IRR with quarterly cash distributions and an 8% preferred return structure.
The SMB Growth Fund is thoughtfully designed around revenue-based agreements tied to real-world business expansion. Think regional coffee chains, neighborhood gyms, restaurants, and other multi-location operators.
The investing window opens June 8 and closes July 10, 2026, or earlier when the fund reaches its $1M cap. Investors can review the offering and reserve allocations during the limited launch window.
What Is the Groundfloor SMB Growth Fund?
The Groundfloor SMB Growth Fund is the launch product of Groundfloor’s new SMB Finance vertical, expanding the platform beyond real estate credit and consumer credit into revenue-based investing.
Groundfloor structured a dedicated SPV, Groundfloor Homegrown SPV LLC, allowing accredited investors to participate alongside institutional capital in Homegrown’s Neighborhood Network Expansion Fund. The underlying fund deploys capital through Revenue-Based Agreements (RBAs), not traditional fixed-payment loans.
Unlike fixed-payment lending, revenue-based investing allows repayments to flex with business performance. When operators grow, repayments accelerate. If revenue slows temporarily, payment timing adjusts rather than immediately triggering default pressure.
Diversifying With SMB Finance
Private market investors have spent years concentrated in traditional alternatives like private equity, venture capital, and commercial real estate. SMB Finance introduces a different type of exposure.
Instead of relying on property appreciation or startup exits, the SMB Growth Fund focuses on revenue-producing businesses already operating at scale. The operating partner, Homegrown, finances businesses with at least $1.5 million in annual revenue, multiple locations, manageable debt levels, and demonstrated customer demand.
Homegrown’s track record to date includes:
- 25% portfolio IRR
- 0 defaults
- $14.4 million deployed
- $8.2 million returned to investors
- 50+ new business locations enabled
- 71% SMB repeat rate
Past performance is not a guarantee of future results, but the structure reflects a growing investor appetite for private market strategies that combine cash flow, diversification, and downside-aware underwriting. For many accredited investors, this is also a diversification move away from traditional real estate concentration.
Groundfloor’s SMB Finance vertical adds exposure to real-economy business growth without direct operational ownership, tenant management, or equity-heavy startup risk.
Invest in the Groundfloor SMB Growth Fund →
Target Returns and Fund Structure
The SMB Growth Fund targets:
- 13–15% net IRR
- 1.3x+ target MOIC
- Quarterly cash distributions
- 8% preferred return structure
- 4–5 year expected term
- 1099-INT reporting
- $20,000 minimum investment
The structure is intentionally designed to remove some of the friction common in institutional private market investing.
Most drawdown-style private funds require ongoing capital calls over time. Groundfloor absorbs that operational complexity through the SPV structure. Investors commit once while Groundfloor manages the capital-call process behind the scenes.
Another structural differentiator is the 6-month, 8% Groundfloor Note paired with investor capital during the deployment ramp. Instead of sitting idle while the underlying fund deploys capital, investor funds begin earning immediately.
The combination of quarterly cash flow, immediate yield pairing, and institutional access is uncommon in private market offerings available to individual accredited investors.
How Revenue-Based Investing Works
Revenue-based investing differs from traditional equity investing and fixed-payment lending.
The underlying fund deploys capital into Revenue-Based Agreements with expanding multi-location businesses inside the Square ecosystem. These agreements are secured against current and future revenues across operator locations.
Rather than fixed monthly payments, repayment scales with business revenue.
If a business grows faster, repayment accelerates. If growth slows, repayment extends over a longer timeline while preserving the total obligation.
Groundfloor also incorporated several investor-focused structural protections into the fund:
- Cross-collateralization across operator revenue streams
- Conservative 3–4% loss assumptions
- 8% preferred return before Groundfloor earns carry
- Quarterly distributions
- No K-1 partnership filings
For accredited investors already familiar with private equity or private credit, SMB Finance introduces a hybrid structure combining elements of growth investing and cash-flow-oriented underwriting.
Groundfloor’s Broader Strategy
The SMB Growth Fund launch marks Groundfloor’s expansion into a third private market vertical alongside Real Estate and Consumer Credit.
The strategy reflects a broader evolution happening across alternative investing. Sophisticated investors increasingly want access to differentiated private market categories without traditional institutional barriers like multi-million-dollar minimums, opaque reporting, or decade-long lockups.
Groundfloor’s role is increasingly centered around sourcing, structuring, and operationally managing institutional-quality investment opportunities for accredited investors.
In the SMB Growth Fund, that includes:
- Negotiating institutional access
- Structuring the SPV
- Independent underwriting
- Managing capital calls
- Pairing capital with immediate-yield Notes
- Simplifying tax reporting through 1099-INT structures
The result is a private market investment designed to feel operationally simpler than traditional private equity while still targeting institutional-style returns.
The Groundfloor SMB Growth Fund opens a new category for accredited investors seeking diversification beyond traditional real estate and equity-heavy alternatives.
With a targeted 13–15% net IRR, quarterly cash distributions, an 8% preferred return structure, and exposure to revenue-generating businesses already operating at scale, the fund introduces a differentiated approach to private market investing.
The offering window remains open through July 10, 2026, or until the fund reaches capacity.
Review the Offering and Reserve Your Allocation →
FAQs
The Groundfloor SMB Growth Fund is an accredited-only private market investment focused on revenue-based investing in proven multi-location businesses through a Groundfloor-managed SPV structure.
Revenue-based investing provides capital to businesses in exchange for a share of future revenue rather than fixed loan payments. Payments rise or fall alongside business performance.
The fund targets a 13–15% net IRR and 1.3x+ MOIC over an expected 4–5 year investment term.
No. The SMB Growth Fund is available exclusively to accredited investors and eligible Groundfloor stockholders.
The fund targets quarterly cash distributions and includes a paired 6-month, 8% Groundfloor Note during the deployment period.
