Ian EdmundsonHidden River, LLC CFO Services Practice456 Montgomery St.; San Francisco, CA

7 Blindspots of Early Stage Companies

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Contract CFO (or “Interim CFO”)End to End Financial Leadership

The “Interim CFO” Role

Hidden River, LLC is uniquely positioned to provide financial leadership to help achieve your firm’s objectives.

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Blindspot #1:Forward Visibility

• Reporting = “rear-view mirror”

• “Forward Visibility” = Forecast + KPI’s + Dashboard

Anticipate your Capital Needs

Periods of growth can be most detrimental on cash flow

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Blindspot #2:Not Having a Capital Strategy

• How and from where are you going to get the money?- Equity / Debt / Convertible Debt / Bank- Angel vs. VC

• Milestone-based, multi-year plan

• Use of Proceeds

Keep abreast of your available capital markets

The worst time to raise money is when you badly need it.As your business progresses, so do your

available capital markets

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Blindspot #3:Not Having “Transaction Controls”

• Who provides final sign-off on Pricing and Contracts?

• Preserving Gross Margins

• VSOE for Revenue Recognition

• Preventing One-Off Deals and Special T&C’s

Standardize your contracts and create a “Deal Desk”

Deal variations create major problems downstream

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Blindspot #4:Inadequate Sales Compensation Plan

• Reward desired behavior while guarding against self-serving actions

• Know your fully-loaded cost of sales

• Timing of cash: pay commissions upon receipt?

• Hunters vs. Farmers

Align plan to your business model and GTM strategy

A bad comp plan will equal a bad sales force

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Blindspot #4:Inadequate Sales Compensation Plan

• Reward desired behavior while guarding against self-serving actions

• Know your fully-loaded cost of sales

• Timing of cash: pay commissions upon receipt?

• Hunters vs. Farmers

Align plan to your business model and GTM strategy

A bad comp plan will equal a bad sales force

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Blindspot #5:Not being prepared for diligence

• Traditional M&A due diligence punchlist

• Operational document repository

A data-room should always exist and be updated

Playing catch-up can kill an otherwise viable deal

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Blindspot #6:Not maintaining Investment Banking and VC relationships

• Investment banking pitch-books

• VC sector focus

• Know “your” market not “the” market

Stay on the Radar

Companies are “bought,” not sold

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Blindspot #7:Managing your Commercial Banking Relationship

• Bank covenants

• Working capital and their ability to help you grow

• Control the message

Help your bank help you

Should be more than just a checking account

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Smaller growth companies require access to experienced finance and accounting advice, but usually don’t have the resources to justify a full-time CFO or Controller. Later-stage growth companies may have a CFO / Controller who is over-taxed, and may need temporary help to get them through a critical strategic financial transaction. Other companies may want to implement process improvements, restructuring, best practice benchmarking and implementation, or even establish a Corporate Performance Management Office with a CPO. It’s possible to plan and execute financial strategy in line with larger companies by leveraging experience and expertise on a scalable part-time basis with the integrated set of services of a contract CFO.

Contract CFO ServicesClient Benefits

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Sample of CFO EngagementsHidden River, LLC Case Studies

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Ian Edmundson manages Hidden River’s CFO Services practice and has over 18 years experience in the public and private capital markets. Since joining Hidden River in 2007, he has served as Interim Chief Financial Officer for Transera Communications, Inc.; Host Analytics, Inc.; readMedia, Inc.; BriefLogic, Inc; Mobile Cannon, Inc.; and VHT, Inc.

In the role of CFO, Ian provides oversight for the financial management of his client’s business, directs the corporate treasury function, establishes the protocols and standards for internal reporting, oversees the budget process, develops the capital strategy, and manages shareholder communication and risk management. During his time at Hidden River, he has assisted his clients in raising over $35 million of equity capital from firms that have included Advanced Technology Ventures, Trident Capital, Hopewell Ventures, Lauder Partners, Origin Ventures, and StarVest Partners.

Before coming to Hidden River, Ian worked in Corporate Development at Openwave Systems, Inc. (NASDAQ: OPWV) where he managed the 2005 divestiture of Mobile Device Management (sold to Innopath Software, Inc.) and the 2006 acquisition of SoloMio, Inc. (call completion and real-time messaging).

Ian EdmundsonManaging Director, Hidden River LLC – CFO Services

iedmundson@hiddenriverllc.com