On this episode of The Roadmap, Michael Davis, CEO and co-founder of Homegrown, reveals how his company offers a fresh approach to funding for brick-and-mortar businesses. Davis shares his personal journey growing up in an entrepreneurial family, the struggles of securing capital, and how Homegrown provides much-needed, non-dilutive financing to help entrepreneurs grow their businesses—without risking their personal assets.
Undercapitalization: A common roadblock
Michael Davis, founder of Homegrown, emphasizes that undercapitalization is the leading reason most businesses fail, a lesson he learned firsthand from observing his parents’ entrepreneurial struggles. He explains that many business owners underestimate the financial resources needed to grow and sustain a company. To solve this, Homegrown provides capital without requiring entrepreneurs to risk personal assets or give up equity, helping them scale while maintaining full ownership and control.
Homegrown focuses exclusively on brick-and-mortar businesses, defined as any business where customers physically enter a location, such as yoga studios, medical offices, gyms, and restaurants. Davis intentionally excludes tech companies from this model, emphasizing that brick-and-mortar operations represent a substantial share of U.S. consumer spending and play a crucial role in supporting local communities. By focusing on these businesses, Homegrown aims to empower a traditionally underserved segment with growth capital tailored to their specific needs.
How non-dilutive expansion capital works
A key feature of Homegrown’s approach is its use of “non-dilutive expansion capital.” Instead of requiring equity in return for funding, Homegrown utilizes a revenue-sharing model. Entrepreneurs repay a small percentage of their revenue over time, enabling them to grow without incurring heavy debt or sacrificing ownership. This structure supports long-term financial stability and aligns well with the interests of founders looking to preserve their stake in the business.
Davis contrasts this model with traditional loans, which often involve personal guarantees that can threaten an entrepreneur’s home, vehicle, or savings. Drawing on his family’s experience with bankruptcy, he emphasizes that Homegrown mitigates this risk, allowing owners to invest strategically and confidently.
Flexible repayment system
Homegrown’s repayment plan is designed with flexibility in mind. Payments adjust according to a business’s monthly revenue across all locations—lower in slow months and higher in strong ones. Davis notes this shared-risk approach fosters a true partnership between Homegrown and entrepreneurs, creating sustainable growth in industries prone to market fluctuations.
“Our model allows proven entrepreneurs to access capital without taking their ownership. And that’s one of the most powerful things we do. It enables entrepreneurs to grow their businesses without putting everything they’ve worked for at risk.” – Michael Davis.
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