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.

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