Optimize’s goal: Take crowdfunding model to institutional investors

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Financial Post | Barry Critchley | July 7, 2013

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P2P has been renamed as Optimize Capital Markets. (Source: Thinkstock/Getty)

Almost four years after launching P2P Financial Inc., an online business-financing platform, Matthew McGrath has taken that entity to the next stage in its development.

In essence, P2P has been renamed — it’s now known as Optimize Capital Markets — and has been taken up the food chain with a focus on institutional investors, while maintaining its links with high net worth individual investors who meet the accredited investor test.

“We have evolved into Canada’s first institutional crowdfunding program,” said Mr. McGrath, whose 15-person firm is registered with the regulatory authorities in four provinces, B.C., Alberta, Ontario and Quebec, as an exempt market dealer. And integral to that model, Optimize will try and match up — initially online — those that are looking for capital with those that have capital.

Mr. McGrath, a former vice-president with the Royal Bank, is Thursday expected to announce that the platform is officially open for business — even though it has recently closed its first deal, a $2.5-million capital raise for a Quebec-based multi-sports complex.

There are three elements to Optimize’s business model:

• High net worth accredited investors. Mr. McGrath said that 20,000 such investors have  indicated their willingness to deal with the Toronto-headquartered firm. Typically that group invests $50,000-$200,000 in any one transaction;

• The smaller and more independent financial advisor network. “By sheer numbers this group represent a much bigger opportunity for getting financings [than the bank-owned dealers],” argues Mr. McGrath;

• The traditional institutional sector — the large investors.

So what is the market, for issuers, that Optimize hopes to attract?

It will deal with either public or private companies, especially those that are small-cap and with a technological bent.  “Any company that’s below $150-million in market cap we can help through private placements. The funding gap is not just restricted to private companies. But there is a massive funding gap in the public markets as well,” said Mr. McGrath.

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