BBC #7: 10/23/12

Presentation and Presenter: Marvilent.com, Mike Lopez

Mike Lopez made his first of hopefully many appearances at the Baltimore Business Club.  After getting his MBA with a marketing concentration on the West Coast, he came to Baltimore as an outside sales rep for an engineering firm.   Inspired by his experiences in San Francisco, Mike and a partner launched Marvilent.com, a company that organizes social and adventure events for its customers.  For the presentation, Mike explained the story behind Marvilent, toured his website, and explained some of his plans for the business going forward.  Toward the end, he illustrated some of the major challenges he has faced since launching, which led to an open discussion on ways to overcome some challenges moving forward.

One of the biggest challenges Mike faced thus far is marketing the business.  Marvilent has experienced success, but the company is still bootstrapping, and Mike is exploring various ways to get the word out about his website.  A discussion also opened up looking at different revenue models, including membership payments/discounts, points systems, as well as the current referral program Marvilent has in place.  Some ways Mike is looking to grow the business from here include hosting cooperate events, using social media more effectively (including facebook, twitter, and other photo sharing apps), and forming strong partnerships with local bars and strategic businesses to cross market joint ventures.

Presentation and Presenter: Alternative Ways to Raise Capital, Matt Stout

The second presentation was led by Matt Stout, an “entrepreneur’s lawyer” working out of the Baltimore area.  A business veteran himself, Matt currently focuses on helping his clients buy and sell businesses.  Matt started out, like several presenters have at the BBC, by discussing the merits of The Lean Startup and its concepts, authored by Eric Ries.  The biggest lesson he promoted from the book is to constantly test new products and services as cheaply as possibly to continually revise the offering available to the customer.  By doing so in real life, rather than in theory on spreadsheets, you can make adjustments with a better probability of having the desired effect in the marketplace.

The main part of Matt’s presentation centered around a unique technique to raise capital for small businesses.  Currently, the most well known methods of raising cash for a small business are through friend/family loans, bank loans, angel investing, and venture funding.  Matt presented the idea of raising capital through a seemingly unlikely way, although one that is very possible when investigated further, going Public.  Taking a $1m, $5m, or $10m dollar business Public may seem impossible at first, but it is a very real scenario for some small businesses and can help achieve certain goals when handled properly.

The cleanest way for a small business to go public (it can literally have $0 in lifetime revenue) is through a “reverse merger.”  A merger occurs when a big company buys a little one.  In this case, the opposite happens.  A little company buys a bigger one.  There are many public company’s that currently exist on paper, but don’t actually do any business.  They may have at one point, but currently exist as empty shells.  In a reverse merger, a small company buys the bigger company, brings it’s filings current and essentially restarts a dead company in whatever business the buyer chooses.

There are several advantages to going public for a small company.  All the business’s financials are open and transparent, instantly increasing the value of the company to an outsider.  There is no longer guess work to a company’s value.  It is on public paper.  A business can also raise capital on the smaller public markets, and in some cases, it is easier than raising cash through banks, angel investors, and VC’s.  Another major advantage for a small company being public is the ability to issue stock.  Stock can be used just like cash, and can be issued to buy talent and other companies.  This is something that is extremely complicated in a private scenario, especially when it happens regularly, and is a major advantage for taking a small company public.