CFO Studio Magazine with David Huber

16 WWW.CFOSTUDIO.COM 4th QUARTER 2012 I f you face the challenge of raising money for an established company, you can gener- ally rely on your firm’s numbers to make your case. For example, an investment-grade com- pany can use its earnings and credit ratings to prove its worth. A company with a non-in- vestment-grade credit rating or no rating can focus on its EBITDA multiple or assets such as accounts receivable, inventory, real estate, and intellectual property. But if you’re working with a company that’s just starting out, one that hasn’t gener- ated any revenue yet and has no tangible assets to borrow against, it would seem that your options are significantly limited. In such a situation, how do you raise money? Start by Selling Yourself If you don’t have trailing EBITDA or assets to offer, you will initially be selling your management team and your vision. Who’s likely to buy your story? Your best candidates are: • You and the other members of your management team. • The people most likely to believe in you: your family and closest friends. So get ready to use a home-equity line, dig into your savings, and buttonhole your rich uncle or father-in-law as soon as you can. Your Next Steps As your company grows, you’ll need to find new sources of funding to fuel that expan- sion. Possibilities include: • Angel investors • Government or foundation grants • Venture capital firms • Hedge funds • Private-equity investors • Strategic investors You’ll need more sophisticated tools to convince these sources to invest: an elevator pitch, a mission statement, and a very refined PowerPoint presentation summarizing your company’s unique features. Your ability to sell your vision and your management teamwill be critical to your success. Just as important will be your ability to show your investors how they will benefit from your success. Understand that financial AS A NEWCOMPANY RAISING MONEY By Bert Marchio Chief Financial Officer, Edge Therapeutics CFO CFO 2 NO EBITDA. NOASSETS. NOPROBLEM?