Securing private capital shouldn't be a CFO's greatest worry.

• Author: Huntz, John
• Position: PRIVATEcompanies

After emerging from what has been an exceedingly difficult private capital fundraising environment, many CFOs at private growth-stage companies are starting to focus on other barriers to success beyond simply raising capital. In fact, with a 12 percent increase in venture capital investment during the first quarter of 2006, finding capital may be one of the easiest aspects of the executive's job; how to deploy that capital in order to create returns for investors is increasingly a much more difficult task.

So, where should executives focus their efforts after they have received the needed capital? The following guidelines developed from working with dozens of growth-stage companies over the past 20 years may help senior leaders avoid certain pitfalls in their quest for long-term success:

* Build a strong management team: This is the most critical element to a company's success. An "A+" management team with a "B" product will do well despite the challenges, but a "B" management team with an "A+" product is risky. The greatest challenge is managing the talent so that the whole is greater than the parts. Resumes and background checks are indicators of an individual's ability to succeed, but how those individuals interact in a team setting is much more difficult to predict.

The task of building a cohesive management team falls squarely on the shoulders of the senior leadership. The CEO and CFO must have the leadership ability to recognize the weak parts of the team and either build on them or remove them from the mix.

* Carefully manage cash flow: The CFO must stay on top of every element of spending and cash flow. Ensure that there are systems in place to aggressively monitor and manage that process. Recognize that investments in new products and markets typically take twice as long to develop and require twice the amount of cash as initially projected in order to reach a given level of revenues. Timing a market's inflection point is one of the business world's trickiest tasks.

* Maintain time to market deadlines: Recognize that product developers and engineers have an innate bias to "over-engineer" a product so it has all the bells and whistles. Executives must manage the development process with a bias to delivering the product to market as early as possible.

The value of having early customer feedback far outweighs the incremental functionality that results from a delayed product launch. Companies often become stranded in the refining stage...