Raising capital is often cited by startup founders as their least favorite and most difficult part of running their companies.
Fundraising requires constant travel and a willingness to be rejected. It can be a taxing process.
RaisetheMoney.com founder Chris Stewart wouldn't describe the process as easy, but his background in politics prepared him well for pitching to investors. RTM, as it is listed in the directory of the west Little Rock office building that houses its headquarters, is an international payment-processing platform for political campaigns that recently closed a $1 million Series A financing round.
Stewart, an attorney, identified the need for a political fundraising platform during a failed run for Pulaski County justice of the peace in 2012.
"Raising money in politics gave me the confidence and ability to do it better," Stewart, 39, said. "We have investors from California, Florida, Arkansas, New York and Las Vegas. It definitely took persistence. I think I started with a list of 100 or so potential investors."
Backing from the Arkansas Economic Development Commission, through its Equity Investment Tax Credit program, has helped RaisetheMoney.com in its attempts to raise capital from outside investors. Each year since 2007 the state's economic development agency has offered $6.25 million in tax credits. Investors in tech-focused companies are eligible for 33.3 percent of their investment and may be used to offset 50 percent of an investor's Arkansas income tax liability in any one tax year. Unused credit can be carried forward for a period of nine years or can be sold with the approval of the AEDC.
Qualifying startups must be technology-based and pay wages that are 150 percent above the state or county average. According to the most recent data available through the AEDC, the average hourly wage for the state of Arkansas was $19.60 and for Pulaski County it was $21.90.
"This program is designed primarily to help these early stage, knowledge-based companies with the ability to raise money," said Bryan Scoggins, director of Business Finance for AEDC. "[RaisetheMoney.com] has created a lot of their own technology to help solve a problem in an industry where there is incredible opportunity. As they are more successful, the potential for more job creation and job growth arises in the state of Arkansas."
AEDC Executive Director Mike Preston called the award of tax credits through the program "our blessing. It shows that the state has vetted a business and given a thumbs up."
Since the Equity Investment Tax Credit program was started in 2007, more than 70 companies have qualified for the incentive.
Little Rock businessman Bill Carlton was one of RaisetheMoney.com's first investors and has continued to help fund it, including a recent $50,000 investment. Carlton said he agreed to fund RaisetheMoney.com despite losing money on a pair of startups in Fayetteville and Jonesboro that for a time made him leery of future tech company investments.
Carlton said he figures RaisetheMoney.com is "about a year away" from breaking through and providing a steady return on investments. He is confident it will be more successful than his other attempts at investing in startups.
"Both of those other investments were terrible flops. I lost a lot of money," Carlton said. "What I didn't like about them was they wanted me to invest and then make it happen for them. My job was to invest. I wasn't supposed to go out and sell it for them. Chris asks my advice every now and then, but I know he's out there making it happen."
A Brinkley native, Stewart said his background in politics has helped in developing software that campaigns find useful. He worked on Gov. Asa Hutchinson's 2006 campaign for governor, served as the general counsel for the state Republican Party and set up the political action committees tied to the investigation of former Circuit Judge Michael Maggio's final judicial campaign.
Stewart was deposed in a 2015 lawsuit accusing lobbyist Gilbert Baker and nursing home owner Michael Morton of conspiring to funnel contributions to Maggio's campaign. Questions regarding $6,000 in donations made by Stewart in that campaign were raised during the deposition.
It was during his 2012 run for justice of the peace in Pulaski County that Stewart recognized a need for a platform geared specifically for political fundraising. PayPal and other options existed, but were difficult to use for both candidates and donors.
Donations made through those other online sources were often labeled incorrectly on bank and credit card statements. Among the features offered by RaisetheMoney.com is the names of candidates appear on bank statements.
RaisetheMoney.com delivers receipts to donors and campaigns making compliance with donation rules easier to follow, Stewart said. Money donated through the platform is available the same day for campaigns to use.
When RaisetheMoney.com landed three U.S. Senate races in 2014, Stewart began to feel confident his idea was going to be a success. Powerful political action committees including the Club for Growth and the Heritage Foundation also began using the payment processing platform during that election cycle.
RaisetheMoney.com makes its money by charging a 4.9 percent fee, plus 25 cents on all transactions. After paying credit card processing fees, whatever is left goes to the company's bottom line.
Stewart declined to offer specific dollar figures, but said the company has doubled revenue each year since it launched in 2014. RaisetheMoney.com employs about 20, including four full-time workers in Little Rock. The other employees are a mix of contractors and independent sales agents.
A partnership with payment processing software company Stripe Inc. is allowing RaisetheMoney.com to take its platform to 20 countries with democratic elections. RaisetheMoney.com will be used in countries including Australia, Canada, Japan, Netherlands, Spain, Sweden and the United Kingdom.
"When we started landing major Senate campaigns and [political action committees], that's when we knew we'd hit on something," Stewart said. "A majority of our candidates aren't in Arkansas, but this is where we're based. Some people don't know that we're here, but we're the industry leader in political financing and we've got a lot of open doors internationally now."
SundayMonday Business on 01/15/2017