Insights into Entrepreneurial Finance and Strategy

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Discover expert advice and valuable insights on entrepreneurial finance, strategy, and market trends from a seasoned CFO/COO with over 30 years of experience. Explore topics such as raising equity, IPOs, board structures, key focus areas, and survival rates of new businesses. Gain valuable knowledge to navigate the entrepreneurial landscape effectively.

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A RECOVERING ENTREPRENEURIAL CFO 1 SPR Consulting, LLC

33 Years Experience, 20 as a CFO/COO Raised approx. $300M in private equity/venture capital Drafted an S1 registration for an IPO Opened 6 foreign offices on 3 continents with contracts in 40 countries Sat on numerous boards of directors Taught Finance and Mergers & Acquisitions in the graduate program at John s Hopkins University PERSONAL EXPERIENCE 2 SPR Consulting, LLC

Sean P. Roddy, CPA, CMA, CGMA, MBA sproddy215@hotmail.com 301-518-5410 CONTACT INFORMATION 3 SPR Consulting, LLC

Entrepreneurial market Board of Directors (BOD) vs. Board of Advisors (BOA) Raising equity & the IPO My two cents OUTLINE 4 SPR Consulting, LLC

Some entrepreneurial statistics Key Areas of Focus Cap Table / Capitalization Meetings Summary ENTREPRENEURIAL MARKET 5 SPR Consulting, LLC

New Businesses less than 1-year old 700,000 650,000 600,000 550,000 500,000 1995 2000 2005 2010 2015 BLS.gov ENTREPRENEURIAL MARKET--STATS 6 SPR Consulting, LLC

Jobs Created by businesses < 1-year old 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1995 2000 2005 2010 2015 BLS.gov ENTREPRENEURIAL MARKET--STATS 7 SPR Consulting, LLC

Survival Rates of businesses < 1-year old 100% 100% 80% 80% 60% 55% 40% 35% 27% 20% 20% 0% 1 2 5 10 15 20 Survival in terms of years BLS.gov ENTREPRENEURIAL MARKET--STATS 8 SPR Consulting, LLC

Organizational Structure Credit Cards Commingling Resources Payroll and Sales Taxes Related Party Transactions Problems and Utilizing Professionals Fail Fast SBIT/STTR Grants ENTREPRENEURIAL MARKET KEY FOCUS AREAS 9 SPR Consulting, LLC

Cap Table Capitalization Operations generate sales/RE Debt Grants Friends and Family Angels Customers as investors VC s and Private Equity IPO s, Reverse Mergers, PIPE s Keep it Clean One Class of Stock Few Shareholders Family and Friends Issuance of Shares ENTREPRENEURIAL MARKET CAP TABLE & CAPITALIZATION 10 SPR Consulting, LLC

Have an agenda Determine frequency Communicate responsibilities/expectations Accountability periodic evaluations Listen and don t waste time ENTREPRENEURIAL MARKET--MEETINGS 11 SPR Consulting, LLC

Finances and Equity Meetings Relationships Communication My two cents ENTREPRENEURIAL MARKET--SUMMARY 12 SPR Consulting, LLC

Duties & Responsibilities Time & Commitment Ethics Summary BOARD OF DIRECTORS VS. BOARD OF ADVISORS 13 SPR Consulting, LLC

Legal Aspect Ethical Aspect Remember to ask yourself... What value do I bring to the board? Will I have the time to serve the board properly? If you can t answer these with a degree of honesty then decline to serve BOD VS BOA--SUMMARY 14 SPR Consulting, LLC

Directors Advisors Represent & Protect An informal outside group of experts Monitor Provides support and advice Render Advice No power or binding legal authority Appoint, Evaluate and Replace the CEO Owner keeps control of business Legal Duties Serves at the pleasure of the owner BOD VS. BOA DUTIES & RESPONSIBILITIES 15 SPR Consulting, LLC

Duty of Care Duty of Loyalty Duty of Good Faith (not a fiduciary duty) Duty of Full & Fair Disclosure (newest, from DE) Other Duties BOD VS. BOA LEGAL DUTIES OF A DIRECTOR 16 SPR Consulting, LLC

Directors Time Advisors There are no standards for advisory boards. They are purely voluntary and the advisor serves at the pleasure of the founder. Board Meetings 50 hours Preparing for Board Meetings 50 hours Traveling & Receiving Director Education 50 hours Meetings Golden Rule Ego Trap If you ve established one maximize it s potential by using it. BOD VS. BOA--TIME & COMMITMENT 17 SPR Consulting, LLC

Set the tone at the top Courage, Candor and Conscience so long as the actions taken don t involve fraud, conflicts of interest, or breaches of the duty of loyalty, and we made them in good faith with a reasonable basis for believing the action taken was lawful, informed and in furtherance of the company s purposes BOD VS. BOA--ETHICS 18 SPR Consulting, LLC

Things to focus on The Private Equity Markets The U.S. public markets The IPO process My personal experiences RAISING EQUITY & THE IPO 19 SPR Consulting, LLC

Distraction A Beginning Dilution & Diversity Use of Funds Develop & Protect IP RAISING EQUITY & THE IPO THINGS TO FOCUS ON 20 SPR Consulting, LLC

Major trends that have appeared since around 2000 Increase in costs and complexity of being a public company Collapse of research coverage and liquidity for small capitalization companies Market focus on short-termism that harms innovative companies with long-term time horizon projects. These have been good for the VC and PE industry. Per the NAVC, Q2 18 RAISING EQUITY & THE IPO THE PRIVATE EQUITY MARKETS 21 SPR Consulting, LLC

10 YEARS OF VENTURE BACKED TRANSACTIONS 90.0 12,000 80.0 10,000 70.0 60.0 8,000 50.0 6,000 40.0 30.0 4,000 20.0 2,000 10.0 - - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Deal Value ($bn) # of Deals RAISING EQUITY & THE IPO VC TRANSACTIONS PER THE NAVC Q2 18 REPORT 22 SPR Consulting, LLC

Number of IPO's 600 500 400 300 200 100 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 RAISING EQUITY AND THE IPO NUMBER OF IPO S IN THE U.S. 23 SPR Consulting, LLC

# of public companies 5,100 1980 8,100 1996 4,300 2017 9,000 8,000 30--DOW 500 S&P 30,000,000--?? 7,000 The World Bank World Federation of Exchanges 6,000 5,000 4,000 1980 1985 1990 1995 1996 2000 2005 2010 2015 2017 RAISING EQUITY AND THE IPO NUMBER OF PUBLIC COMPANIES IN THE U.S. 24 SPR Consulting, LLC