Good morning, Broadsheet readers! 23andMe announces a new service, Kylie Jenner unveils her new clothing line, and a second-time founder is building a new asset class. Have a thoughtful Thursday.
– Brick and mortar. As the cofounder of Glowbar, a chain for facials, Neha Govindraj encountered the financial pain points of expanding a brick-and-mortar business.
“I had a multi-unit services business and wanted to continue expanding location count,” she says. “The question was if I have existing doors that are doing really well, how can I almost pull forward that revenue that I know is going to come to finance my future locations?”
The experience inspired the 30-year-old Bain & Co. alum’s second startup: Bonside, a fintech company that finances brick-and-mortar businesses. Launched in June 2023, Bonside offers a form of financing that doesn’t require physical businesses to give up equity to investors or take on debt. Rather than take an ownership stake, Bonside writes checks in exchange for a percentage of businesses’ revenue, paid back until those stores reach a fixed cap. It calls this financing a “repeatable revenue agreement.”
Bonside started with a $3 million fund, closed a year ago, that backed 10 businesses as they looked to expand. Recipients included Evolve Med Spa, which went from eight locations to 12 with the help of Bonside’s capital; the restaurant Jojo’s ShakeBar, which grew from four to seven outposts; and the yoga studio Y7. Overall, businesses in Bonside’s portfolio increased their location count by 30% since taking the startup’s funding. At the same time as it deployed its own capital, Bonside created a marketplace for investors to back physical businesses with the same model.
Today, Bonside is announcing its second funding vehicle, a $5 million fund it calls Premiere II, Fortune is first to report. “We’re here, we’re actually going to do this, and we are going to create an industry around this,” Govindraj says of the second fund.
In its new vehicle, Bonside’s starting check size will be $250,000; on its private marketplace, minimum check size is $15,000. The fund is backed by high-net-worth individuals as well as real estate executives and family offices with ties to the brick-and-mortar sector.
Govindraj sees this model as a much-needed funding alternative for sectors for which venture capital just doesn’t make sense, from food and beverage to car washes and daycares to her own former category, beauty and wellness. (She left Glowbar in 2021.) And yet, she says, this kind of financing can also pair well with venture capital or private equity; such firms are investors in Bonside. The startup’s financing can help businesses grow without diluting the ownership stakes of other investors. Govindraj also sees Bonside as an alternative to bank loans that doesn’t require personal guarantees. “It’s a non-dilutive option that they now have in their capital stack, in addition to equity, in addition to debt, in addition to their own private capital, in addition to their cash flows,” Govindraj says.
Ultimately, Govindraj hopes that introducing a new kind of funding helps elevate the brick-and-mortar sector. “There’s been so much celebration around hockey-stick growth and the software businesses of the world,” she says. “The reality is they make up less than 1% of the world. So what about the other 99% of businesses?”
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
The Broadsheet is Fortune’s newsletter for and about the world’s most powerful women. Today’s edition was curated by Joseph Abrams. Subscribe here.
ALSO IN THE HEADLINES
- Testing 1, 2, 23. 23andMe cofounder and CEO Anne Wojcicki announced Wednesday that the company, mostly known for testing customers’ ancestral roots, is rolling out Total Health, a new service that uses DNA to access genetic predispositions to health risks. The service will cost $1,188 a year when it becomes available in November and represents the fruit of Wojcicki’s long-held interest in bringing 23andMe to health care. Bloomberg
- Style me, Kylie. After building her cosmetics line to a $1 billion valuation, Kylie Jenner’s next venture comes in the form of Khy, an everything-under-$200 clothing line dropping this fall that's inspired by her own style. With mom Kris Jennner and business power couple Emma and Jens Grede as cofounders, Khy is the latest unicorn prospect in the Kardashian-Jenner family’s empire. Wall Street Journal
- If you cover it, they will come. Companies that announced they would cover reproductive care for their employees after Roe v. Wade was overturned received 8% more interest from potential applicants than those that didn’t. Employers in male-dominated fields like engineering and data science that made the same announcement, however, saw very steep declines in employee satisfaction. Fortune
- Madam speaker? Wednesday marked an end to the revolving door of Republican representatives lining up for a shot at Speaker of the House. GOP women were notably absent from the fray during the three-week vacancy. Rep. Kat Cammack (R–Fla.) remarked that Republican women were doing the “smart” thing by staying away from the chaos, a stance Rep. Nicole Malliotakis (R–N.Y.) echoed: “Men have egos, women have brains,” she said. Reuters
- Menopause perks. Roughly 4% of companies that offer sick leave, including Microsoft and Abercrombie & Fitch, now also provide some sort of menopause care as part of their health care benefits, according to a report from benefits consultant NFP. The support often comes in the form of counseling or access to hormone therapy and is aimed at keeping menopause-aged women in the workforce. Bloomberg
MOVERS AND SHAKERS: Bask Suncare announced Teresa Boucas Fuller as senior vice president of marketing and partnerships.
ON MY RADAR
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Meg Ryan explains why she took a 'giant break' from Hollywood Vanity Fair
Vestiaire Collective’s Samina Virk says women mentors are the key to success Bustle
PARTING WORDS
"I stepped into some pretty big shoes. I felt like in the beginning I was floating around it, but I'm just starting to get my footing."
—Gayle Benson, venture capitalist and owner of two professional sports teams in New Orleans, on treading her own path five years after inheriting billions
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