When Should an Early-Stage Company Hire a CFO?
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When Should an Early-Stage Company Hire a CFO?

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Slides from the webinar, "When Should an Early-Stage Company Hire a CFO?" presented by Walter Tendler and hosted by SecureDocs data room. The slides review the topics covered, focusing on then an......

Slides from the webinar, "When Should an Early-Stage Company Hire a CFO?" presented by Walter Tendler and hosted by SecureDocs data room. The slides review the topics covered, focusing on then an early-stage company should hire a CFO and the value a CFO can bring to an early-stage company.

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  • 1. When Should an Early-Stage Company Hire a CFO?
  • 2. About SecureDocs, Inc. • SecureDocs is a virtual data room for sharing and storing sensitive documents both internally and with outside parties. Company Basics: • Developed by the team that created and launched GoToMyPC and GoToMeeting • Web-based business software for financial and legal professionals • Distinguished through it’s ease-of-use, industry-leading security, and flatfee pricing
  • 3. Background - Walter Tendler wtendler@gmail.com • Audit Manager with Ernst & Young • CFO of Early Stage Public & Private companies – Infrasonics (medical device) – sold to Puritan Bennett – PersonaLogic (web based decision guides) sold to AOL – Figure 8 Wireless (ZigBee chip) sold to Chipcon (Norway) 12 mo. later Chipcon was acquired by Texas Instruments – Amira Pharmaceuticals (asthma drug) signed $100M+ drug development & licensing deal with GlaxoSmithKline and later acquired by Bristol-Myers Squibb • CFO / Admin. Partner Avalon Ventures (La Jolla) • Financial Consultant for Early Stage Companies
  • 4. Polling Question
  • 5. When Should an Early Stage Company Hire a Chief Financial Officer (CFO)?
  • 6. Outline of Today’s Discussion  Early Stage Company Financing, Administration & Accounting  Role of an Early Stage Company CFO  Qualities of an Experienced Early Stage CFO  Examples of a CFO Making a Difference  When to Hire a CFO  How to Find an Experienced CFO for Your Company  Q&A
  • 7. Early Stage Company Financing, Administration & Accounting • • • • Equity Fundraising – Initial & Subsequent (Angel, Pref. Series A) Debt & Equipment Financing General Business Strategy – Decisions w/ Long Term Impact Negotiation of Key Contracts and Agreements (Technology, Leases, Consultants, etc.) • Hiring & Managing Bankers, Attorneys, Auditors & Insurance Brokers • Management of Human Resources:  Offer letters; hiring process; terminations; benefits (PTO, health ins., 401K, stock option plan); company culture; outsourcing HR? • Financial Forecasting & Modeling • Accounting System & Procedures (QuickBooks) • Board Presentations & Communication
  • 8. Role of an Early Stage Company CFO  Understand Business Details and Strategy & Work as Key Member of the Management Team  Manage Fundraising and assist CEO with Key Investor & Board of Director Communication  Support CEO and Team; Organize and Manage all Administrative Functions so Founding Employees are Free to Create: Cash Flow Contracts, Leases, HR, IT Accounting, Legal, Insurance
  • 9. Qualities of an Experienced Early Stage CFO • Extensive CFO operating background and experience in Fundraising and M&A • Capable of managing daily actives using a limited staff and working with Executive Team to develop and successfully execute Key goals and strategies • Developed network in your industry or with other CEO’s or CFO’s in your industry • Prior success / experience with Venture backed companies and their Boards
  • 10. Examples of a CFO Making a Difference • PersonaLogic – Planned company move to new 12,000 sq’ offices 1 month after joining; (16 employees, no down time) – Negotiated $1M venture loan (Phoenix Leasing) used to the last $25,000 one month before company was acquired – Maintained financial statements, contracts, personnel files & was told by AOL this acquisition had the cleanest due diligence they had seen (AOL acquired many companies) • Figure 8 Wireless (F8W) – Flew with founder to Oslo to perform due diligence on private company (Chipcon) that offered to acquire F8W; deal closed in four weeks and one year later Texas Instruments acquired Chipcon ($200M).
  • 11. Examples of a CFO Making a Difference • Amira Pharmaceuticals – 15 scientists left Merck San Diego to form new company (Amira) initially financed equally by Avalon Ventures, Versant & Prospect – Used my credit card for founders to buy $105,000 worth of equipment auctioned by Merck on short notice (value est. to be $500K+ and this team knew each piece of equipment in auction) – Rushed to get O-1 Visa for senior scientist on team and two H1B visas for a scientist and Chief Business Officer (CBO) – Worked as part of team led by CBO to negotiate $100M+ licensing deal w/ GlaxoSmithKline (GSK) < 2 years after founding – Invested initial $24 million from GSK and avoided Auction Rate Securities market freeze
  • 12. Troubling Story of Auction-Rate Securities “In the toughest jam are investors who purchased auction-rate securities sold by a student-loan trust or a collateralized debt obligation -- about a third of the $330 billion market. Many are receiving little or no interest, and might not get their money back for years.” March 2008
  • 13. When to Hire a CFO A part time CFO can be used effectively very early in the process – generally after raising $250K+ A full time CFO will generally come on board after raising a larger Series A or Series B of $5 to $10+ million
  • 14. How to Find an Experienced CFO • Network, network, network Early stage lawyers (Mintz Levin, Cooley, Wilson Sonsini and many others) Early stage banks (Silicon Valley Bank, Square 1 Bank, Comerica) Venture Capital Firms LinkedIn & Twitter Ask Founders & CEO’s of successful companies in your space or those financed by the same Angels or VC’s
  • 15. Q&A