A few words with Edward Rhodes of MCP Corporate Advisors.
What are the drawbacks or raising capital online?
The biggest challenge with respect to raising capital online is making your project stand out from the pack. Unfortunately, Kickstarter, Indiegogo and the other sites lack the kind of search mechanism that can separate the really good investment opportunities from the poor ones. Consequently, the overwhelming majority of good projects don't get viewed by interested investors.
If you weren't an investment banker, would you do it?
I would if I had the type of project or funding requirement that falls below the radar of traditional institutional investors and/or high net worth investors. Crowdfunding is not perfect but it can work.
How do you feel about small businesses raising capital?
This is a great time for small businesses to raise capital. Companies that can make a product or provide a service that fills a need or reduces costs to the end customer can thrive in this global economy. However, not all of these emerging companies will be able to raise initial capital from a group of investors, a commercial bank or even crowdfunding. The vast majority of these firms will have to bootstrap themselves to a certain level, i.e., achieve a level of revenues and clients before they will be able to attract outside capital. Sure, it's difficult, but it can be done.
Do you feel they have to be organized in Delaware to scale?
No, the company can be organized anywhere. Many firms organize in Delaware because of the state's attractiveness for business and the significant amount of case law with respect to business operations and dispute resolution.
Tell us how your business relates to capital raising?
At MCP Corporate Advisors, we are a one-stop for small and emerging businesses. We prepare business plans (with rigorous market research), financial projections and presentations for a flat fee that put these firms in a great position to get funded. In addition, we can raise debt or equity capital from our network of funding relationships on a success fee basis.
Anything else you would like to share?
Yes, this is a great time to start or grow a businesses. Just remember that there are no magical shortcuts to success. Obstacles can be overcome with the right approach. I tell my clients to use the DOE approach: Discipline, Organization and Execution. If you can put those things together success will follow.