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Techba workshop ... Techba workshop ... Presentation Transcript

  • Financial aspects of setting up a company in the US Presented to: The TechBA Acceleration Plan For 3 rd Generation Companies By: Edward “Bud” Austin 650-854-4550 [email_address] www.kranzassoc.com
  • The Financial Aspects of Setting Up a company in the US
  • What needs to be done
    • Hire Your Interim CFO
    • Determine Department Structure
    • Set up a Chart of Accounts
    • Purchase General Ledger Software
      • Quick Books
      • Peachtree
    • Develop a Cash Management Program
    • Establish Key Vendor Relationships
    • Develop a Financial Plan
    • Planning and Budgeting
  • What needs to be done
    • Establish Consistent Reporting Formats
    • Establish Filing System
    • Establish Policies and Procedures
    • Establish Employee Benefits Program
    • Establish Stock Management Program
    • Establish Contract Management Program
    • Establish Revenue Recognition Plan
  • Hire your interim CFO
    • Why Hire a CFO
      • Experience
      • Contacts
      • Obtain a known quantity
      • Team player
      • Strategic Contributor
    • Check References
      • Prior CEO’s
      • Venture Partners
      • Industry Experts
  • Develop a Financial Plan
    • The financial plan translates the business plan into financial terms
    • Requirements
      • Establish a department structure
      • Establish Chart of Accounts
      • Set-up Accounting System
        • Quick Books
        • Peachtree
      • Format Reports
  • Determine Department Structure
    • Development
    • Marketing
    • Business Development
    • Sales
    • G & A
  • Set-up Chart of Accounts
    • Establish a numerical chart with department and standard account structure
      • First two digits = department number
      • Last four digits = account number
    • Allows for consistent reporting of financial activities
  • Planning and Budgeting
    • Define Goals and Objectives
      • Corporate
      • Department
    • Bottoms-up Budget
      • Start with department level salaries and build up from there
      • Roll up expenses into:
        • Income Statement
        • Balance Sheet
        • Cash Flow
        • Headcount
        • Waterfall
        • Capital Expenditures
    • Obtain Board Approval
  • Purchase Accounting Software
    • Key Features
      • Low cost
      • Ease of use
      • Requires disciplines for cash management, revenue and expense management
      • Reporting structure
      • Analytical ability
  • Establish Consistent Financial Reporting Package
    • Monthly and Quarterly Reporting
    • Balance Sheet
    • Income Statement
    • Cash Flow Statement
    • Waterfall Report
    • Actual vs. Budget Variance
  • Cash Management System
    • Establish Authorization Matrix
      • Two signatures over $10,000
      • Establish authorization levels
        • Managers = $ 1,000
        • Directors = $5,000
        • VP’s = $10,000
        • CEO = > $10,000
    • Paper documentation for all activities
  • Establish Key Vendor Relationships
    • Banks
    • Venture lending
    • Insurance
      • General Corporate
      • Employee Benefits
    • Payroll Service
      • ADP
      • TriNet -
    • CPA Firm – Tax filings
  • Set-up Filing Requirements
    • Personnel Folders
    • Personnel Files
    • Corporate
    • Accounting
  • Establish Policies and Procedures
    • Disbursements
    • Travel & Entertainment
    • Capitalization
    • Hiring Practices
    • Purchasing
    • Option Management
  • Establish Employee Benefits Program
    • Salary Structure
    • Vacation and Sick Policy
    • Medical, Dental, and Vision Plans
    • 401K Plan
    • Flexible Spending - Sec.125 Cafeteria Plan
  • Establish a Stock Management Plan
    • Set a Budget
    • Set-up a Policy for Issuance, Exercise, and Repurchase
    • Set-up “Cap Table” and Reporting Formats
    • Obtain Board Approval
  • Set-up Contract Management Process
    • NDA’s
    • Development
    • Consulting – Draft Standard Agreement
    • Customer
    • Vendor
  • Establish a Revenue Plan
    • Sales Acceptance Policy
    • Sales Order Processing
    • Credit Limits
    • Revenue Recognition
  • Venture Lending
  • When To Look for Debt
    • Significant capital expenditures needed
    • Ramping sales creates an increase in AR and a delay in cash collections, thus impacting working capital
    • After or in conjunction with Financing
    • Desire to leverage anticipated spending on proto-typing and demonstration units
    • Bridging to Next Round
    • Cash is needed to finance inventory build up during ramp up of the business
  • Types of Debt & Collateral
    • Equipment Lines – Equipment Only
    • AR Lines – AR Only
    • Growth Capital – Blanket Lien, no IP
    • Bridge Loan - Blanket Lien, no IP
    • Growth or Bridge – Blanket with IP
  • Key Financial Terms
    • “ All In” Interest Rate
    • Loan Term
    • Interest Only Period
    • Buy Out Provisions or Back End Payments
    • Loan Facility Fee
    • Legal Fee
    • Warrant Coverage
    • Merger, IPO terms
    • Lock up provisions
    • Right to Invest
    • Prepayment Penalty
    • Interim Payments
  • Key Non Financial Terms
    • Draw Period
    • Funding Restrictions
    • No MAC Default
    • Cash Control Agreement
    • Cash requirements
    • Covenants
    • Reporting
  • Equipment Line Specific Terms
    • Lookback provisions
    • Draw Period Limitation
    • Softcosts - 30-50%
    • FMV Buy Out & Back End Provisions
    • Buy Out Notification
    • Procurement Services
    • Technology Exchange Programs
  • Growth Capital Specific Terms
    • Blanket Liens
    • AR Carve Out
    • Cash Control Agreements
    • Negative Pledge on IP
    • FMV Buy Out & Back End Provisions
  • AR Specific Terms
    • Collateral - AR or Blanket
    • Eligible Receivables
    • Formula Based Method
    • Financial Covenants
    • Warrant Coverage
  • Types of Lenders
    • Banks
      • SVB
      • Comerica
      • Bridge
      • Horizon
    • Venture Lenders
      • Goldhill
      • Lighthouse
      • WTI
      • TriplePoint
      • Ritchie
      • ATEL
      • Pinnacle
      • Hercules
  • Representative Client List
    • Abeona Networks
    • Adam Ventures
    • Adspace Networks
    • Aduro
    • Agitar
    • Airplay
    • Allegro Networks
    • Allocity
    • Amicus Ventures
    • Angel Investors
    • Apexon
    • Applied Microstructure
    • ArcSight
    • Artemis Medical Products
    • Aruba Networks
    • Azeala Networks
    • Bella Pictures
    • Biz360
    • BoldFish
    • Blaze Network Products
    • Camitro
    • Caw Networks
    • Clearwell
    • Cloudshield
    • Communication Ventures
    • Covad
    • Covalent
    • Rubric Software
    • Sanctum
    • Santur
    • Scent Tech
    • Scimagix
    • SecureAll
    • Sequence Design
    • Sequoia Capital
    • Sigma Networks
    • SiNett
    • SkyStream
    • Sylantro
    • Tahoe Networks
    • Talking Blocks
    • Tellium
    • TimeDance
    • Timestock
    • Tollbridge Technologies
    • Topio
    • Traiana
    • Visto Corporation
    • Vhayu
    • Wavion
    • W5 Networks
    • VUE Technologies
    • Xros
    • Yelp
    Liquid Systems Longboard Luminate Software LucidEra Market Tools Memx Mimosa Systems Nag Tag NanoGram Nexxo Financial (Enviso) nthOrbit Objectivity Obongo Onetta OS Group Palo Alto Networks Panascopic/Jaspersoft Parama Networks Pharsight Powerfile Presidio Health Preview Systems Qumranet Riverhead Networks Rhapsody Networks Crosspoint Ventures Digital Fountain DiVitas Networks Dot Edu Ventures eCast El Dorado Ventures Entrisphere Focalink Forescout Garage Technologies Gossett & Gunter GoRemote Gracenote Granite Global Ventures Greenfield Networks Hyperic, Inc InControl Interlace Invisible IT iPass/GoRemote Jajah Kavam Kiwi Networks Kolia Krugle Latitude Communications Lipstream Networks