Banking on opportunity Featured

8:00pm EDT June 25, 2008

Joe Gaffigan and Chris Randall started MFC Capital Funding in February 2005 with just three employees in one small, temporary office and no revenue.

The idea for the business came while the two were waiting in the ornate lobby of a recently opened niche private equity firm.

Gaffigan and Randall decided to raise money to start a new finance company focused on providing senior debt to lower-middle-market private equity sponsored portfolio companies. Larger competitors existed and thrived, including GE and Merrill Lynch, but experts said the lower middle market was not a proven market. It was widely thought the companies were too small and unsophisticated for this type of lending.

Gaffigan and Randall knew better and knew that if they could get funded that they could prove the market existed and was lucrative. With the help of Triton Capital Partners, they talked to more than 200 potential funding sources, including hedge funds, insurance companies and numerous financial institutions. Their luck turned when they met with the Pohlad family in late 2004. They convinced the family to provide enough debt and equity capital to create a successful company.

MFCCF hired a small Chicago advertising agency to help tell its story in a very creative way to the private equity community. The financial risks were high, as the two founders paid for the investment banker out of their own pockets to help them find capital.

HOW TO REACH: MFC Capital Funding,