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When Should an Early-Stage
Company Hire a CFO?
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
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
Polling Question
When Should an Early Stage Company
Hire a Chief Financial Officer (CFO)?
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
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
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
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
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).
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
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
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
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
Q&A

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When Should an Early-Stage Company Hire a CFO?

  • 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
  • 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