Pete’s Bagels has launched an innovative investment offering that allows anyone with a bank account to support the family-owned company’s expansion while earning a tidy profit.
The popular St. Petersburg-based bagel shop is now on SMBX, a public exchange that allows everyday investors to purchase shares of Small Business Bonds. Supporters, who receive 11% interest, have 42 days to help Pete’s Bagels raise $1.24 million.
The funding will help the local business compete with national chains by opening three to five new Tampa Bay locations, expanding its commercial kitchen and growing its catering and wholesale programs. Pete’s Bagels has raised $23,260 in six days.
“I feel like it’s really important for Pete’s to keep our family-owned and operated vibe,” said owner Steven Peterman. “I kind of sought out an opportunity where we could potentially compete a little bit, at least locally, and still maintain our independent ownership.”
Pete’s Bagels opened in 2019, and there are four locations. While the company generates over $3 million in annual revenue, Peterman noted that small businesses typically struggle to raise capital and rely on short-term debt.
He added that three bagel franchises supported by private equity have recently opened or announced new shops in Tampa.
Pete’s flagship location is in St. Petersburg’s Grand Central District. Peterman opened Seymour’s Cafe downtown and a drive-thru concept in a historic service station in the Harbordale neighborhood earlier this year. There is also a shop across the bay, in Ybor City.
“All four of our little current locations use the same kitchen in Gulfport,” Peterman said. “We can expand on that. So, our first step would be to open up more locations within a 40-minute radius. And then from there, start to look in other areas of Florida where we could open up another production kitchen.”
He called SMBX “geared toward mom-and-pop shops” and “super accessible” for the average person. Staff were “really excited” to invest small amounts.
The minimum investment is $10. While most investors choose to remain anonymous, an SMBX user from Nevada contributed $5,000.
Participating small businesses must file with the U.S. Securities and Exchange Commission and submit a prospectus. However, Peterman said the onboarding process was “really easy.”
“It kind of evens the playing field a lot,” he said. “It’s a really cool win-win situation for everybody involved.”
Peterman explained that SMBX audited his company’s finances before listing the bond sale, which “they do underwrite to make sure we are able to afford it.” An independent auditor will conduct a second review once a business raises over $125,000.
The bulk of the funding, 83.75%, will support staffing, expanding Pete’s wholesale and catering offerings, new locations and transportation for delivery and distribution. Peterman said the business will soon move into a new 4,600-square-foot kitchen, which will allow it to produce “infinitely more bagels than we do now.”
Pete’s will dedicate 12.25% to refinancing short-term debt, and SMBX takes the remaining 4% as a service fee. Peterman said he would dedicate the same percentage of any amount raised if he doesn’t reach his $1.24 million goal.
“But any amount for a small business is super helpful in order to get us to the next level, and be able to, potentially, open another location,” he added. “I feel like we’ll feel good about whatever amount it is, and then kind of see where we are at that point.”