Nick Cinquino graduated in Business Administration and Accounting from Monmouth University before pursuing Financial Planning and Services from New York University. He started his career as a staff accountant at Baker Tilly Virchow Krause, LLP. He served as Senior Financial Planner at GF Management, CFO at BW Health and CEO at Startup Financial Model.
In October 2016, he founded the Philadelphia, Pennsylvania-based White Birch Consulting, LLC. The company supports entrepreneurs and investors with their investment deals. It offers the support they need to help them successfully raise funds and maintain the fiduciary responsibility to those who invested. Through fundraising consultation and virtual CFO services, they ensure startups are best prepared for what lies ahead.
Excerpts from an interview:
How has the investment domain transformed over the years?
When I was raising money for companies 5 years ago, almost everyone was investing with their hearts. While a lot of investors still do this, I have seen more due diligence now more than ever. A 12-month pro-forma financial spreadsheet is no longer enough. More and more investors I speak with want to know exactly how the company will be generating revenue and what their exit plan is. Investors need to trust that the entrepreneur will spend their invested money in the most effective way possible.
Are banks missing out entirely on the action in the start-up space? How are they ensuring that they also get a piece of the pie?
Yes. I do believe that banks are missing out on the action in the start-up space. Venture capital, incubators, angels – these are all so necessary to startups, not because of their money but because of the experience they bring to the table.
A traditional banker has never really played the role of business advisor, so most entrepreneurs look at a business loan as their last option. What they are not seeing is the power that comes with leveraging a venture backed fundraising round with a bank loan. If an entrepreneur can raise $4M of their $5M fundraising round through a VC, they should be thinking of closing out the round with traditional debt. This is a beneficial scenario for all parties. The VC alleviates risk. The bank ‘gets a piece of the pie.’ And the entrepreneur proves that their startup can effectively service debt.
It should be noted though that since most startups don’t have the collateral to secure a loan, founders will have to guarantee the loan. Banks like Silicon Valley Bank are well ahead of other banks when it comes to accommodating startups in this manner. That said, a traditional big bank would not be as enthused about backing these types of loans because they have lived through many market swings and have been slapped on the wrist enough times to know that it is very risky business to back these startups in such early stages.
Will the amount of regulation being put in place overwhelm banks? What will banks need to do to make enough money to support the increase in investment in compliance and cyber security?
In the United States, bank regulation appears to be easing rather than increasing. A bill to erase some of the Dodd-Frank banking rules has already passed in the house this year. Rolling back these regulations should mean that banks will have easier time lending money. This should allow for banks to generate more revenue.
Banks should be more concerned about cyber security than anything. Threats are only on the rise. The issue should remain a top priority for banks for years to come. Banks should look to bring on an out-sourced firm to handle threats until the bank is educated enough to begin building its own departments and initiatives.
Banks also need to stay on top of blockchain technology and the cryptocurrency boom. It could be viewed as a massive threat or a massive opportunity. It will be interesting to see which banks are effective in honing the new technology.
Will Amazon put every competitor out of business in the e-commerce space? Is it becoming too big?
I actually think the opposite. Amazon has created a safe and secure environment for online shopping that has enabled an entire generation to feel more comfortable shopping online. This will generate more business across all ecommerce sites. Also, a lot of customers still want an intimate customer experience and Amazon, like Walmart, can never provide that. So, there will always be room for small businesses to operate online just as there is on main street.
The growth of Amazon is all relative. I believe that a company should seek to grow to its full potential but that it should always keep its core competencies in mind. Amazon has done this and their valuation reflects that. But if they continue to grow at this pace and they lose sight of what made them Amazon in the first place, it could spell trouble. That said, there are a few areas of commerce that align with Amazon’s core values but they have not yet entered. The two that really stand out to me are healthcare and automobiles. I see Amazon being able to disrupt both industries in a very meaningful manner.
What is your outlook on the financial sector of the US? The Fed is expected to raise rates, but would that be because the economy is growing or due to inflation? What, if any, is the difference between the two scenarios?
Ms. (Janet) Yellen has stated that increasing competition for workers was driving up wages, and inflation was likely to follow. The Fed could raise rates more slowly if it concludes that its inflation expectations need to be revised. She says: “Given that monetary policy affects economic activity and inflation with a substantial lag, it would be imprudent to keep monetary policy on hold until inflation is back to 2 percent.”
In my opinion, the economy is growing but I think that local government needs to do a better job at bringing the right jobs to its residents. If computer programing became as common a profession as a truck driver or a teacher, I believe our economy would reach new heights. The world is changing and we need to do a better job at showing our workforce the types of fulfilling and secure careers they can have in that changing world.
From your experience, which nation has the best tax codes and collection system in place?
Estonia, Ireland, Finland, Sweden and Switzerland are all famous for their corporate tax structure. Estonia, which is ranked #1 in the International Tax Competitiveness Index Rankings by the International Tax Foundation, provides a low corporate tax rate, no double taxation of dividend income, a nearly-flat 21% income tax rate, and a territorial tax system that exempts 100% of foreign profits.