CFO Bal Bhullar: Taking Your Startup to Exit

All startups face the same fundamental challenge: having enough capital to grow and achieve their goals. At the center of navigating that challenge is the role of a seasoned CFO—someone who can align financial strategy with the company’s ambitions. 

For those fortunate enough to reach the stage of considering going public or being acquired, the journey becomes even more complex, involving rigorous financial, regulatory, and strategic milestones.

Bal Bhullar, CFO and Board Member at NASDAQ-listed Damon Inc. and Independent Board Member at Lexaria BioScience, brings over 25 years of leadership experience across public and private companies in technology, manufacturing, automotive, e-commerce, blockchain, energy, and health and wellness.

Her expertise spans IPOs and reverse takeovers, capital raises and market-cap expansion, risk and operational discipline, investor relations and storytelling, and a steadfast commitment to governance, ESG, and diversity.

Don't miss hearing a CFO's firsthand insight about how to address funding needs from startup through exit. 

Transcript

Jeanne Gray: I am Jeanne Gray, publisher of American Entrepreneurship Today and host of the podcast series Experience Voices, where I talk with highly accomplished people who share the critical elements that led to their success.

Our guest today on experienced voices is Bal Bhullar, CFO, and board member at Nasdaq. Listed Damon Inc. and an independent board member at Lux Bioscience. Over the past 25 years, she's led public and private companies spanning technology, manufacturing, automotive, e-commerce, blockchain, energy, and health wellness.

Her broad experience includes IPOs and reverse takeovers, capital raises and market cap expansion, risk and operational discipline, investor relations and storytelling, and a sustained commitment to governance ESG and diversity. I'm pleased to have, be, join me to discuss the important role that the CFO has in a high growth company that has the potential to go public or be acquired.

Bal Welcome to Experience Voices. 

Bal Bhullar: Thank you, Janine. It's a pleasure to be here and speaking with you. 

Jeanne Gray: Well, I took a look at your background as CFO. I thought a great place to start would be having you share some of the milestones in your career that's led you into a position of helping companies, startups grow through funding.

Bal Bhullar: Sure. So some of the key milestones have been taking companies public starting from ground zero and, building the company up a lot to do with investment banking relationships and creating , the capital funding required in order for a company to meet. Its. Business obligations and operational , and basically move that company forward through their journey and over to the other side where they are revenue generating.

Jeanne Gray: So where did you start in your career? And , is there a pivot? Because I think entrepreneurs, when they're interviewing an A CFO for the first time. They don't appreciate that CFOs can have a very wide background and if they have aspirations of being funded. Share a little bit about maybe the things that changed in your career that put you into that arena.

Bal Bhullar: Sure. I mean, fundamentals in terms of my education, I've got my accounting designations, the CPA as well as my risk management designations. So the educational aspect brought me the tools and then into the reality. So I, did grow up in a entrepreneurial background, my family, my parents, all entrepreneurs, so I already had that kind of edge in terms of understanding to be able to wear all different hats and being able to.

Look at intense situations and how to resolve certain problems move forward from that. But given that I have that, and I've had two of my own companies as well previously, both in the health and wellness one was a, health spa, and the other one was in online supplements.

And so in terms of my work experience. , A lot of it was on starting with a larger company and understanding how the different aspects of that incorporation went through and the journey it had to follow through. But where I found my niche spot was in growth companies, micro cap a lot in the public arena.

And then also some startups that basically progressed into the capital markets. 

Jeanne Gray: So let's, before we go too far, let's define some of the, common , funding terms that entrepreneurs face. And the early stage is pres series A. So when an entrepreneur is out looking for funding and they say, or they're told they're pre-seed, what does that mean?

Bal Bhullar: My personal interpretation of, pre-seed is basically friends and family, , some amount of capital to kind of get it to that next level. And it's, people that are close in the circle that are wanting to invest into, , your vision , in the company. 

Jeanne Gray:  And so seed, the seed round brings in the professional investor.

Bal Bhullar: That would, yeah. So then you're looking at enhancing that knowing that you've got the various small amount of shareholders in it. And then with the seed round , it's again, a broader. More professional kind of shareholders , that come in. But , you're not networking out to, let's say the private equity fund, which is your, next series, your series A, which becomes a little bit more involved on potential funds and the outreach.

That would go 

on with that. 

Jeanne Gray: Right. So in the seed round, the angel investors are usually the ones that are jumping into the company once they have achieved some comfort level and they're still going in when there's a fair amount of risk. ' track record is still pretty soft, would you say?

Bal Bhullar: Yes. I mean, most angel investors are looking at a average, five year to get their investment back. And that could come in different forms. It can come in through an acquisition, it can come in through a buyout of some sort. It can come in through a public listing. 

Jeanne Gray: And series A, which is really quite the step up.

I mean , a startup, I guess is very aspirational to be able to say that they would qualify for Series A round. On the financial side, what are they seeing in the performance of the company that makes them feel that they're ready for a series A? 

Bal Bhullar: I think that they would have to have a business plan, they have to have fundamentals in place.

 To do series A, you would essentially need to have a pretty concrete financial model as well that coincides with your business plan. And I think the fact that private equity or other professional funds. , Or investment funds that might be looking at investing. They need to see what's the end game?

How is this gonna be successful? , How is it gonna be profitable? How are we gonna get our return on investment? So it's really important that, the investor deck that's been put together falls in line with the key fundamentals that the management team is trying to portray and show that growth, so like actually have the milestones there.

This is what we're gonna achieve. , At months from now and then another six months from now, whatever those milestones are, you wanna keep them pretty tight and you wanna ensure that you're close to meeting them or exceeding that. I think the worst thing that. Management can do is expose themselves in a way where they're over promising , and under-delivering.

So in essence, if someone's ready to go into production and they know that they're at least three years away and they're too overly optimistic, thinking that they're gonna be in production within a year, saying that to, an investment fund. Or a private equity group, it can get you into trouble because they'll not put money in again, because you're not being realistic with your projections, you're not meeting your milestones.

Where is the money gonna be used? If you're trying to raise this capital, how are you going to apply it to the operation? And how is that gonna work with,, what you've promised, and if so, you're getting funding and you're not actually committing it to getting a milestone or a few milestones completed within that timeframe, you're going to lose confidence of those investors.

And once you start losing confidence. , Pressure starts to build up as well. 

Jeanne Gray: , It sounds like the venture capital firm or the, private equity firm really is focusing on that the money they're putting in is really tied to a deliverable or a milestone. That moves the company's value up would you say that's the, they wanna see the value of their money.

If they're putting, you know, $10 million in, there's a number that they're hoping that in a year or two, that value of that company's there. So I hear the expression a down round. Is that usually the case where the milestones have been missed and more money is needed, but the valuation did not increase?

Bal Bhullar: That would be correct. and that's not really something that the company would want to do and obviously impacts all your prior shareholders as well is if they put in money. At a much higher valuation than what your next round is coming to. So because it's private, there's a lot more room and forgiveness to how to essentially accommodate your prior shareholders if they had in terms of the valuation.

But I think, , the strength of the company comes through. Meeting its milestones and providing what that exit strategy is going to be. At the end of the day. 

Jeanne Gray: So valuation is one concern as an entrepreneur is moving through these different stages and the founders, I'm sure are experiencing a lot of stress knowing that if , they don't get additional funding, they might be quite strapped to continue on.

So are there other concerns that an entrepreneur should have as they're. Moving up the value chain the investor. Is it more sophisticated understanding of their finances or what are some of the things that they've got to take on that, , gets them into this new arena? 

Bal Bhullar: I think the team needs to be skilled in what they're doing.

I think you really need the right. Management team. So your finance, in terms of your CEO, your CFO. And then, depending on whether it's a tech company or it's , some sort of production company, , essentially your COO Chief Operating Officer. And those three, in a C-suite are essential.

You're working very closely together and. You know, when it comes to the capital investments and funding side, your CEO and your CFO are working very closely together, along with the operations. The operations needs to provide. The milestones that need to be hit, where then the finance side can go and raise capital based on what's being done on the operational aspects.

So ide at the hip, one can't operate without the other, but if you don't have the fundamentals and you don't have a succinct C-Suite team that supports one another, it makes for a very. Delicate and, and risky venture. Then, 

Jeanne Gray: startups usually progress to a point where they're putting advisors around them and, you know, usually they say, oh, I have an advisory board, which can often be fairly casual and sometimes more formal.

But then there's the board of directors. So where do, where does a, formal board come in? Is that. of, when looking to go into a Series A or they're really seeing the trends where they're just simply expanding. And what does a, board bring then? 

Bal Bhullar: I would say that you would want a board based on what the objectives of the company is.

So an example would be, let's say prior to doing a seed round. the Angel investors are gonna wanna know who's on your board. And you would wanna have a board that provides expertise from either industry or adds value to the company. And if it doesn't add value to the company, then , it doesn't really have essentially a place so the board board can bring in.

, Finance, a board can bring in industry experience. A board can bring in legal, a board can bring in marketing. So it's really important to have a board that aligns with the company and management and sees the same vision , and provides that additional support. When you're going into the seed round, you've got these angel investors.

I'm sure they all wanna know who's on your board. And essentially they would, be investing in the management and the board and going into the next round of financing. And if it's a large investor or a large fund, they might wanna have their representative or one of them to sit on the board so that they can see where the money is being managed.

And are you meeting, the objectives that have been set forth in order for this investment. So use of proceeds are those use of proceeds actually being used for what they were supposed to be so that the company can progress. 

Jeanne Gray: So when a entrepreneur is first starting to look for funding it's a given that they should be thinking about the exit for the investors that they're bringing on.

So let's, I mean, I guess what I know is there's the IPO and there's acquisition. So is that really the two fundamental pathways that an entrepreneur should know that their particular type of company's long-term goal and strategy is to either go the public market or to be acquired by larger entity?

Bal Bhullar: That. And then depending on what product or what value proposition the company has, they might wanna acquire other companies so that they become larger. So there would be a third one I would add to that is depending on what , their value proposition is, it could be also that they're doing the m and a and Doing the acquiring of other companies to make them larger essentially through consolidation 

Jeanne Gray: when they, they're at the point of being told that they are attractive for being an IPO. What are the factors that begin to converge that move that from sort of theoretical to actual you know,, they're performing well.

They've got the team in place, but I imagine going into the public market, there's like probably a handful of things, a checklist that they've got to be thinking about somewhat differently now that it's gonna be a public entity. 

Bal Bhullar: It is a completely different game. There is no real similarities between the private and the public company.

And, and the reason I say that is it's highly regulatory. So My focus is more on the US side, so you know, on the SEC in terms of their compliance. So the regulatory aspects of a public company is rigorous. Understanding what is required to stay listed. Meeting the minimum requirements, having a board that's compliant to the, one of the exchanges, let's say nasdaq, for example.

Understanding how that piece works is so different and probably unheard of in the private sector. Just because they, they don't go through that, your disclosures, what you say to the public you cannot, you cannot be making remarks. For example, , if management is saying things about the company that hasn't been disclosed yet, people can get into trouble with selective disclosure.

there's a lot of things that you have to be careful about, and not only that, your life is public. your company is, public. There's full transparency. You can't hide behind anything anymore. If someone's gonna Google you, everything's gonna come out.

Right. So , it's a very structured I have a lot of fun. I mean, I think the capital markets is a lot of fun. I enjoy it. But it's not everybody's cup of tea. And that's really when you're going into an arena of looking at creative ways to raise money, creative ways for acquisitions, it provides so much more opportunity in terms of what a company can leap into versus private, where it becomes very.

Difficult if you're looking for additional funding and nobody's ready to put any more money into the company. 

Jeanne Gray: The role of this CFO changes as I'm hearing all of these additional requirements placed upon the company. But an entrepreneur often is not financially based , or has the financial background.

They have a great idea. And that gets them through the first two or three years maybe gets them the angel funding. But what you've just described as far as for the public markets, that's a lot. So is there a pathway with the CFOs where. They may have one on board for a number of years, but when the company's growing so quickly and an IPO is really reasonable that they may bring in a different CFO they're out there looking for something specific.

How would you describe how that role the CFO. Changes because I imagine you know, I guess I'm speculating here is the CFO has to be able to speak with investors at a very high level. So share a little bit about that aspect of the company's pivoting to going public, but the people have to pivot as 

well.

Bal Bhullar: Mm-hmm. That definitely happens. Sometimes you also see a, change with CEO as well. But CFO definitely I've seen that change. I've seen it where private company CFO would not be able to address Pubco, CFO aspects of their work , and what they would need to do. So investor relations is, very important and ensuring that the investor community is well kept up to date.

For example, you need to have an investor relations section on your website, which is not common in a private company. Investor relations has certain compliance requirements that are regulated the SEC in terms of what needs to be on your website. You have legal that you're constantly also dealing with.

You have the auditors. They have to be PCOB. So , in compliant with accounting standards and the accounting board, all these costs go up, which you don't normally have in a private company. And not only that, the timeliness of when these financials have to be filed, there's a very defined timeline and if you don't file these financials on time.

You could end up facing the threat of a delisting or a halt, which is very detrimental for a publicly traded company. So there's a number of just fundamentals and not even going into the capital raising side that the CFO for our public company really needs to understand. 'cause the worst that could happen is that , they get delisted or halted because they couldn't be compliant with their filings.

Which should be the least of their issue. 

Jeanne Gray: It sounds like the experiences of the CFO into the public markets is paramount. 'cause especially with the timeliness, , there's no room for a learning curve in that. So is there also a change of accounting firm as they anticipate an IPO or.

They've been moving in that direction often, and they've changed accounting firms as, they've gone from a startup to an expansion stage company. 

Bal Bhullar: I think that if your CFO comes from a private sector I don't think that they think about whether this would be suitable for a public company.

But as you start transitioning into looking at, thinking about going public, you definitely need to have audited financials. And then they have to be P-C-A-O-B compliant, which means that there's only a select few firms that will actually do that. So then , you would definitely be transitioning over to a firm that does audited financials.

, and when you're transitioning, you would want to have one that actually deals with publicly traded companies and has a fair amount of experience in that. 

Jeanne Gray: Now, I'm familiar with the NASDAQ and the New York Stock Exchange. Are those the two primary exchanges where company goes public and why does one choose the New York Stock Exchange versus the nasdaq, , or an alternative?

Bal Bhullar: they are the primary definitely , for the us although there's a couple of different ones that are starting to open up as well within the us, but they are the primary. The other places that some companies have also looked at is London on the market there and then in Canada as well.

Um., But , let's stick with the US and in terms of the difference between, the New York Stock Exchange and nasdaq, generally there's more tech companies on nasdaq, whereas on the New York Stock Exchange, there could be more resource based companies as as opposed.

To the nasdaq. So , I think both exchanges are great. It's just I think a matter of preference and they both do have kind of different listing requirements. So there is slight nuances in terms of what their listing requirements are. 

Jeanne Gray: So I imagine then part of the CFO role and the CEO.

When choosing either exchange, they're meeting regularly with representatives from the exchange and familiarizing themselves with those requirements. And 

Bal Bhullar: you would have a representative from either exchange, but generally it's, your legal counsel and they're also providing insights.

So you're working very closely with the legal counsel on the listing,

Jeanne Gray: Are there a few mistakes that an entrepreneur founder should be avoiding as they move into this later stage funding and specifically when they feel that an IPO is within sight?

Bal Bhullar: I think that entrepreneurs, founders should not be threatened at all by the experience that surrounds them.

I think if they embrace it. , They come out so much more powerful and understanding if, the public markets has not been your forte, it's okay. That's why you have a team around you. That's why you're CFO, for example. We'll have that intel and experience and embracing it with your CFO and the two working together.

That just makes a really powerful team. And I think that's more what I've seen is where sometimes entrepreneurs will feel threatened about their team, around them as opposed to how that value is added, not only to the company, but also to them. 'Cause at the end of the day, if your management team .

Is making you look good, and also creating and meeting the milestones and providing that insight as a team. It makes everyone so much more well-rounded, and that's what everyone's gonna be investing into. They don't just invest into A-A-C-E-O. They invest into the management team and the board , that's key.

Because if they don't have confidence in the board and management team, it's gonna be very difficult to have banks that wanna be a part of the company. It's hard for investment funds to come in if they don't have confidence and then in turn, it's very difficult for that company to survive. 

Jeanne Gray: No, I've seen where market volatility.

Has been a challenge for companies going IPO how is that dealt with how many months 

Does a company work to finally enter the market In the IPO, is it usually year or two, six months? , how quickly or how long does the company. Need to pull all of the, the players together to have a successful IPO exit.

Bal Bhullar: I think one of the aspects that makes a company successful through an IPO is trying to do it , when you've already been generating revenue. And it's okay if you haven't, but if you have , the best scenario would be if you're generating revenue. You've got a strong set of financial statements that gives you a, a lot of strength in your IPO.

And then, having that group of shareholders that are backing you. So having that aspect. Also having it where the shares aren't gonna be, kind of free trading right at day one, because then you're gonna have this mass exiting. Holding off on when the release of those shares is gonna happen, I think is really critical.

And then also having the right investment bank and the investor relations program and how all of that flows out. Those are really key. 

Jeanne Gray: Yeah. 

Actually share a little bit about the role of the investment bankers. You know, when we see a company going public, especially the ones that are really well known and you're seeing millions of shares that are gonna hit the market, so there is a distribution network in place, right?

So that,, the underwriters of the, IPO are getting it to all the exchanges and out to the brokerage firms. How does that work? 

Bal Bhullar: , Well, it depends if you're going to do a financing with your IPO, which that's when there could be a possible risk , with the share price going down, you're basing the market value essentially at a valuation .

Pre-market. And what the investment banker is doing is they're helping with the listing process. So nasdaq, for example, you need to have a banker that's gonna support your listing. You can't just go there by yourself as company without an investment banker. So you need an investment banker that's gonna support your IPO, that's key.

So that's where they've got a significant role with that. And then if you're not doing any financing. Then you would wanna have the shares kind of not go into the market all at once. You wanna kind of have them come out in a slower process. And then with the investor relations program, , there's gotta be some big milestones that are also coming with a company that also get the investment community excited.

So those are really key in terms of how you lay out that investor relations program. What are the milestones that the company's gonna be looking at and what can you talk about, and , what is that messaging that you're sending out into the marketplace? 

Jeanne Gray: It sounds like the CEO has a lot of factors that are.

Coming in to pull that trigger. Especially given the market environment, but also as you explained that you got the team and the experience and the milestones and the trend lines. But then you have the external environment as well. So a lot going on. , the pharmaceuticals, the biotechs are often started with the intent of being acquired.

Share a little bit about that whole aspect of the acquisition path. 

Bal Bhullar: Mm-hmm. Sure. I actually sit on a board of a NASDAQ pharmaceutical company, and that's exactly what we're kind of looking at in terms of the future for the company. But in order for that acquisition to happen, your technology, your ip with respect to the pharmaceutical side needs to be proven.

And there's a lot of behind the scenes that happens. There's a lot of conversations that happens with some of these large pharmaceuticals and you can't talk about them in public yet because they don't want anybody to know that that's what's going on behind the scenes essentially. So , it's very different because pharmaceutical companies aren't the ones that are.

You know, looking to be acquired or will be looking at being an attractive target, essentially. They don't generally generate revenue. what happens , is the pharmas are looking for their, their IP to be advanced enough that it works with their, like they'll do tests with their own drugs, right?

Depending on what it is. And so it needs to be advanced enough where it's like, okay,, all the testing's been done, whatever it is that needed to be addressed, has been addressed. And now, we're ready to get to that next level. , And that takes time, right? So you're probably looking at Between five to 10 years, I think, before you see that acquisition happening. But again, it, has to be something that is, enticing to the big pharmas, whereas ev industry completely different. , You're looking at generating revenue, whether it's a product, whether it's a tech.

Aspect of, the EV industry, whether it's supply chain, whatever that might be, those are all revenue generating. And that's, what makes it so different Where I'm talking about , having a revenue producing company is always better and before going through the IPO, because it just is more attractive because.

, the economy is not its best. And so the investors aren't willing to take risk on companies that aren't generating revenue. Difference on the pharma side is that they know this is a product that's gonna be developed , and they believe in that product. So whether it's for cancer treatment or any other research in any other disease, essentially, that's what, is different because everyone knows that that's a much longer path.

In order to get that success versus something that's more product related. I hope that helps in terms of trying to break the two together. 

Jeanne Gray: Yes. The, the intellectual property aspect of, , like I said, the pharmaceutical and biotech is what I have a knowledge of is where they're getting S-B-I-R-S-C-T-R grants and funding.

Some of them department defense where they're going for five years, no revenue, but the people who have founded the company are so specialized that what their research is doing is they have the insight to know where the bigger entity, are evaluating that innovation being done outside of their company.

And what I've observed is, these companies that often they're sitting incubators, et cetera, they are putting out some type of public material , to publicize what they're working on. When you say that's really, the foundation is that they're.

Working 24 7 on something for five years, but they're trickling out insight about, hopefully a breakthrough that's gonna trigger acquisition or in some instances not, the breakthrough doesn't come. So so A CFO who goes into company and you've been in a few, industry knowledge then becomes pretty important. That A CFO who's already has experienced an acquisition strategy is, of particular value. 

Bal Bhullar: The 

knowledge and fundamentals, I would say are absolutely key. I think that A CFO can be agnostic into any industry .

There's a key difference, I believe,, that you have experience in m and a. You have experience in IPOs, you have experience in capital funding, investor relations, corporate governance, if you have all experience in all these different areas. Then you basically agnostic to any industry.

Jeanne Gray: Oh, I see. 

Bal Bhullar: And yeah, so having those fundamentals is key in terms of your basket of tools. But you can literally go from this industry to this industry, to that industry. , If you look in my background, , it's quite diverse in the, different. Sectors that I've been involved in.

I didn't always have experience in, , certain sectors, but , that part wasn't as significant. You learn, right? You learn in, in every industry, but what was significant and is significant as your experience and how to address situations. 

Jeanne Gray: It sounds like you've just answered the next question, what's going through.

My last question is like. Well, what are the questions that A-A-C-E-O or a founding entrepreneur should ask A CFO when they're, within shot of, of having expansion capital even , go IPO and I think. Experience, experience, experience tends to outshine a lot of the other factors.

You don't wanna be in that position with , a learning curve, so to say. And even I didn't think about it when you were saying is the timeliness that goes on to a company once they have started the process of going public. And I use the word stress to imagine. That all these players, whether it's, you know the exchanges, the investment bankers, , the CFO all of these things have to synchronize.

, That's a lot to take on. 

So, 

Bal Bhullar: along with council and auditors, so, , that's the biggest thing and, what the regulatory requirements are through that listing process. And where your numbers are. So there's, there's a lot of factors as you stated, that go into becoming public and understanding and knowing how to manage that.

Knowing how to read the the listing statements and understanding the business aspect of it that also needs to go into those listing statements becomes extremely vital and. Just having that wherewithal makes that process a lot more smoother as opposed to going through it the first time around.

Jeanne Gray: Well Bal. Thank you so much for being a guest and sharing your experience and knowledge on, funding and how a company that aspires to go public or be acquired. Has a lot more insight after our conversation gets them into their, their dream of, of being such one of those big companies we all read about in the news.

So again, thank you for being a guest on Experienced Voices. 

Bal Bhullar: Well, thank you for inviting me, Janine, and I look forward to talking more about it with you in the future.

Jeanne Gray: You have been listening to the podcast series, experienced Voices. To hear more and subscribe, visit american entrepreneurship.com/podcast. Where you will also find a form for listener feedback.