Antiphony Insights - Volume 1, Issue 4: Banking, Corporate Reporting


	Volume 1, Issue 4 Banking, Corporate Reporting

Given the recent wake of corporate governance scandals and accounting shenanigans, it’s understandable that investors are a bit gun-shy these days. However, despite the ominous headlines, a select group of bankers and venture capitalists are still funding promising companies. But, as one would expect, the rules of engagement have changed considerably from the frenzy years. In this issue, we offer insights from Steve Hobman, a seasoned commercial banker and venture capitalist, about how best to approach debt financing in this new era. As always, if you have any thoughts or suggestions, please let us hear from you at insights@antiphony.com.

Debt Financing: Cost-Effective Capital for Growth Steven D. Hobman is the Senior Vice President and Regional Managing Director for the Mid Atlantic–North region of the Technology and Life Sciences Division Comerica Bank–California (http://www.comerica.com). Steve also formed the Ben Franklin/Progress Capital Fund, LP, a $9MM mezzanine fund, for which he serves as a Partner, and is a founder of New Spring Ventures, a $90 MM SBIC Fund, which makes equity investments in emerging companies in technology, health care and business services. There’s no question things have changed for companies looking to secure debt financing. Like the rest of the economy, the banking world has had to alter how it does business in light of the recent wake of disappointing economic news. For starters, there is a greater sense of fear in the market. Bankers are now more conservative when evaluating potential investments, and are scrutinizing business models, balance sheets and management teams with a new degree of caution. In addition, bankers are looking much more carefully at a company’s liquidity and the level of support from other investors such as venture capitalists. In general, the companies who are successful in securing debt financing today tend to be those that are well funded by investors for longer horizons. For example, in the red-hot days of 1998-1999, it was common for a company to raise “A”, “B” and “C” rounds of equity financing in quick succession – often within the course of a single year. Now, most investors are looking to provide companies with 18 to 24 months of funding with the expectation that management will focus their business on a few top priorities and work diligently to preserve their scarce capital. So, if you are going to begin the process of seeking debt financing, here are a few points you may want to consider: Be prepared and organized with the information required by lenders, and make sure your existing investors are prepared to serve as references. Start the communications process early to build and maintain good relationships with your lenders. Whether its good news or bad news, your bankers would rather hear it from you first. Demonstrate you have a defensible and well though-out execution plan. Rather than attempting to do hundreds of different things, including WOW marketing, make sure your company is allocating its resources to a few top priorities that are tied to the core elements of the business. In short, debt financing is still a cost-effective way to leverage a company’s more expensive equity capital. And, despite the cautious lending atmosphere, promising companies are still able to secure financing to grow their businesses. The key is good organization, communication and execution.		The Value of Information Jeffrey Babin, Antiphony (jbabin@antiphony.com) When initially meeting with prospective investors, bankers or board members, making a good first impression is critical. One of the most important criteria they will be evaluating is how well you know the particular details of your business. Specifically, are you able to anticipate the essential information that these stakeholders need to evaluate the current state of your business? And, secondly, do you have current metrics at your fingertips? Being able to systematically gather, sort and analyze Key Metrics for your business can be tough, no doubt about it. However, by developing a sound internal reporting system, not only will you be able to provide vital information to key stakeholders, but you will also have a valuable mechanism for monitoring performance and corporate governance within your organization. For more information about how to establish effective internal reporting and corporate governance metrics for your company, contact Antiphony today at info@antiphony.com. Antiphony Takes to the Streets in MS150 On September 28 & 29, we will join 5,000 local cyclists to ride in the MS 150 City to Shore Bike Tour. To join Team Antiphony as a rider and/or sponsor us contact us at ms150@antiphony.com or visit www.antiphony.com.

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