Growing Beyond Series A Funding: CxO Best Practices

Yesterday’s CxO Best Practice Program was focused on what next steps a company takes after closing their round of Series A funding.

For most their company has entered the growth stage and is facing the challenges of building a business, developing a market presence, expanding technology, and hoping that one day they will become profitable. All of this, while expenses continue to skyrocket. This is a critical tipping point. Unless executives can effectively manage their business and utilize the proper structure, strategy and tools, they'll most likely fall victim to negative cash flows and their growth will not only be halted but stopped altogether. Unless they can secure patent, copyright, and/or trademark protection as the business grows, their technology may be at risk. Luckily, there are a slough of financial, legal and strategic experts who can help. The panelist focused on a number of general points around IP, office space, Headhunters, Board Management and Series-B funding.

1. How can a company protect its IP when pitching their product to a major corporation? First, identify the value of the patent and do not lose sight of the overall business model when trying to file. This process sometimes takes over 2 years and a great deal of money; when many times, it’s not necessary. If your IP represents a unique idea, then it’s worth either “keeping it a secret” or place confidentially provisions on all documentation. Most investors are not focused on how many patents a company has, they’re more interested in the execution, management and business model. Be explicit, document everything and be completely honest with your board: but that was our lawyer speaking.

2. How do you go about selecting an office space when you’re very small and not sure how big you’ll be in 1-2 years? Focus on getting a good tenant rep first and then consider subletting so you’re not stuck in a lease. Also, be prudent and do not buy what you cannot afford; especially in your first 1-2 years out of the gate.

3. Is it worth hiring a headhunter? If you are being hurt by revenue or growth opportunities by not filling this position---hire someone. Also, check with your board and talk with VC’s before hiring a headhunter.

4. Where can the board help you? They are there to help you accomplish your goals: be open and honest with them about them. Do not sell in the first board meeting, focus on being in business mode and set a tone for realistic and pragmatic goals.

5. When do you focus on Series-B Funding? Start thinking about series B immediately after closing Series A. You need to position your company to track to a successful Series B by executing your plan but also by thinking about what the options are for follow on funding (strategic investor, debt financing, new lead for equity round, some combination of the above).

If you have additional questions about today’s program please visit www.austintechnologycouncil.org

Speakers:
Corey Blahuta, Managing Director-Austin, vcfo
Michael Barrett, Fulbright & Jaworski LLP
Jeff Sunshine, The Bank Street Group LLC
Moderator: Michael Cation, Founder, NovusEdge