That's cute...I'm out.

NEW STARTUPS

Startups that you can invest in with as little as $100 right now:

💻 Omneky - Digital advertising meets AI (LINK)

📱 Babbily - Every AI combined into one interface (LINK)

🫖 Softbar - It’s like a bar, but missing perhaps the best part (LINK)

THAT’S A LOT OF DOUGH

Well before the sun begins its daily climb, two Chicago brothers are hard at work prepping for their day.

They move at a hurried pace to mix ingredients, knead dough, and force-feed the oven as many bagels as it can handle.

The brothers are the owners of Zeitlin’s Deli, a bakery with Jewish roots and a bold claim to the best bagels in Chicago.

Despite not having a storefront, the brothers racked up sales at a slew of farmers markets.

In 2023, they sold 79,000 bagels - that’s over 216 bagels a day.

Now they’re looking to break ground on a high-traffic storefront to continue growing their business. To fund this move, they’re issuing the world’s first ever Bagel Bonds.

WTF IS A BAGEL BOND?

Zeitlin’s Deli is offering ‘Bagel Bonds’, a cute name for a unique debt instrument.

Investors in Zeitlin’s Bagel Bonds will receive 5% interest compounded annually over the span of 5 years. The company will use investor funds to move into open their storefront and churn out thousands of bagels.

With the interest, someone investing $1,000 would receive $1,276 at the end of the 5 year period (unless they can’t pay investors back).

But that’s not all - investors can elect to get a 15% premium added to the final amount if they elect to use the money on Zeitlin’s products. Meaning, the $1,000 initial investment could turn into $1,467 in store credit.

THAT’S CUTE! I’M OUT.

I think this is a great win for all parties involved - Zeitlin gets capital, free marketing, & increases their customer loyalty, while investors get a decently fair financial reward. And the community benefits as a whole.

This is exactly an example of what a community round should be. 

But I’m not in crowdfunding for the feel-good vibes. I’m primarily looking to make prudent financial investments with high upside, and this is not one of them for me.

Simply put, there are other investment alternatives out there that offer similar yield with much lower risk. Through Wealthfront’s cash accounts, consumers can get a risk-free 4% return compounded monthly.

Sticking with the $1,000 investment example that would yield $1,221 after the 5 year period. So to recap, in 5 years…

• $1,000 Bagel Bonds → $1,276 cash

• $1,000 Welathfront → $1,221 cash

Zeitlin’s has a pretty high degree of risk - they could struggle with permits, get a really damaging review, a fire could knock out their new store…the list is endless.

On top of that, you cannot access your funds for the duration of the 5 years, whereas on Wealthfront you can.

Is that degree of risk & illiquidity worth an additional $11 a year ($55 total)?

For me, a cold-hearted investor who just wants to safely make money, it’s an easy no. I’ll stick to Wealthfront instead.

By the way, I wasn’t envisioning this turning into a Wealthfront ad, but damn it sure feels like one. I’ll plug my referral code in case anyone wants to sign up and get a boosted 4.5% APY. I’ve used Wealthfront for years and absolutely love it - if you have money collecting a measly 0.05% interest in a traditional savings account you’re really missing out! _{*See terms for full details}

WHY IS ZEITLIN’S DOING THIS?

By the way, I want to be clear - I’m not insinuating that there is any kind of grift going on. This investment opportunity probably makes a ton of sense for the community-oriented investor.

But it doesn’t align with my investment criteria (and I don’t live anywhere close to Chicago).

To Zeitlin’s credit, this is a super clever campaign. Like, every mom + pop shop out there should take notes on this. Zeitlin’s had two choices to fund its expansion.

The traditional way is to ask the bank for money, and this is what Zeitlin’s did earlier on.

The problem with this is that banks will likely charge a hefty interest rate; Zeitlin’s took on a 13% & 16% interest loan when they first got started.

Alternatively, they could strengthen their community. Get a ton of their money back by issuing it as store credit. And run an inspiring marketing campaign that gets the community excited for their store.

All for a 5% interest rate loan. ~Chef’s Baker’s kiss~

I won’t be investing but they seem like good dudes and this is an extremely clever fundraise. If you want to go check them out, I’ll link it below!