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D.C.-based crowdfunding platform EquityEats is changing the way to raises money for restaurants for the second time since it launched last October.

Now, restaurants using the service will no longer offer equity in their businesses to non-accredited investors. Instead, individuals who don’t make $200,000 a year or have a net worth of at least $1 million to qualify as accredited investors will receive food and beverage credit for the full amount of their investments, which can range between $100 to $5,000. They’ll also get a 20 percent return each year in the form of dining credit, regardless of how profitable the restaurant is.

So, for example, if someone invests $1,000, they will now receive $1,000 to eat and drink at the restaurant when it opens plus $200 worth of food and drinks each year the business exists. The initial credit can be used within the first five years of operation, while future credits must be used within one year. EquityEats will have a mobile app that allows investors to track how much of the credit they’ve used. Only accredited investors dropping $5,000 or more will be eligible for a stake in the businesses with the potential to earn real profits (if and when there are any).

When EquityEats first launched, it was limited exclusively to accredited investors. But with the launch of its Penn Quarter pop-up hub Prequel this spring, the company began to take advantage of new D.C. regulations that allow businesses to crowdfund money from people of all income levels by completing a disclosure document with city regulators. Prequel raised $200,000 from more than 300 D.C. residents by taking advantage of these local crowdfunding rules. Likewise, Bluebird Bakery exceeded its goal last week and brought in nearly $400,000.

Ultimately, though, people who looked into investments but didn’t pull the trigger told the EquityEats team that it didn’t make sense for them to read through 79 pages of legal documents in order to invest a mere $100 or $500. Many also felt it wasn’t worth doing the due diligence to validate the projected return on investment. Meanwhile, people who did invest said the number one reason was that they wanted to eat out in restaurants in which they had a stake.

“This new model that we’re working with is so much easier that it just makes sense,” says EquityEats CEO Johann Moonesinghe.

EquityEats is kicking off the new model by launching a campaign to raise $50,000 in additional funds for Prequel. Anyone who invests before Sept. 12 will receive at least a 40 percent (as opposed to 20 percent) return in food and beverage credit in September of 2016. The campaign is followed by three more (now live) from restaurants that are currently hosting pop-ups at Prequel: Jolene from chef Nick Sharpe, Honeysuckle from chef Hamilton Johnson, and BFF (Burgers. Fries. Forever.). Moonesinghe says the goal is that 17 restaurants will launch campaigns through EquityEats in September. In October, 30 more are slated to jump on board, and in November, an additional 70.

Not all of the restaurants will host pop-ups at Prequel. Some are from larger restaurant groups that already have a bunch of establishments. (Moonesinghe declined to name them for now.)

“We have 250 people so far who want to raise with us,” Moonesinghe says. “There’s a huge amount of demand from the restaurant side, and this is a much more scalable model.”

The new model also makes it easier for EquityEats to expand to different parts of the country, given that each state has different laws around crowdfunding. EquityEats has already started crowdfunding in Texas and plans to expand to Colorado next. The revamped model also allows the platform to raise funds for D.C. projects from people anywhere in the country. D.C.’s regulations limit crowdfunding from non-accredited investors to D.C. residents only. “We have so many people who live in Virginia and Maryland who want to invest in the offerings, and under the D.C. rules aren’t allowed to,” Moonesinghe says.

Even with these changes, EquityEats’ crowdfunding model has the potential to transform yet again in the future. After all, the Securities and Exchange Commission is still writing regulations to implement the Jumpstart Our Business Startups Act, which should open things up nationwide for anyone to be an equity investor under certain limits.

“Somebody who’s not accredited should be able to invest in a restaurant—that we strongly believe in,” Moonesinghe says. For a lower dollar amount, he still thinks it makes more sense to give people guaranteed credit to a restaurant rather than equity based on its profitability. That said, “what would be awesome is for someone to be able to invest $5,000 regardless of whether they’re accredited or not, and that will happen once the JOBS Act gets finalized.”

Photo by Darrow Montgomery