Just when you thought the story about the fall of cryptocurrency exchange FTX couldn’t get any worse, there are even more staggering details and it involves every CFO’s worst nightmare: messy Excel spreadsheets.

Sam Bankman-Fried, the chief executive of FTX (which exited Alameda Research in 2019), who stepped down last week when the exchange filed for bankruptcy, said he himself had “poor internal account labeling banking”. as he tweeted. But she also had a rather amateur tone. That’s alarming as the Bahamas-based company has raised an estimated $1.8 billion through several rounds of funding. It hit a $32 billion valuation in January. FTX has been backed by some of the largest venture capital firms including Sequoia Capital, SoftBank and Tiger Global Management.

My colleague Luisa Beltran has obtained documents showing the style of SBF. “With each FTX round raised, Bankman-Fried sent out a spreadsheet to prospective investors showing things like revenue, profit and loss, daily users and expenses for FTX, according to an executive who received the documents,” Beltran writes. “Fortune two sets of spreadsheets were sent on the condition that we could review but not publish the original documents, which were dated December 2021 and June 2022.”

He continued: “Taken together, the documents show an initial picture of a rapidly growing firm run by a founder who has eschewed traditional management structures, board oversight, accounting and lawyer teams, and other practices.” standard of companies growing to this size Spreadsheets are a far cry from controlled financial data; rather, they appear to be home-grown Excel files, which are sometimes confusing and have inaccurate labels.

“They are sales documents and do not provide a clear account of how FTX was valuing its various tokens or liabilities when calculating figures such as ‘net earnings,'” Beltran writes. “And yet Bankman-Fried was able to translate those documents into nearly $2 billion from some of the most savvy investors around.” For more details on the spreadsheet numbers and analysis, read Beltran’s full story here.

So in general, what do fundraising documents presented to investors typically look like? For private companies, it can vary widely, particularly for early-stage private companies versus more mature and late-stage private companies, Andrew Murphy, managing partner of Loup, a Minneapolis-based technology investment firm, told me.

“Typically, an early-stage private company will share a deck with potential investors,” Murphy explains. Many times these companies don’t have much to share about finance or auditing, she says. “If an investor expresses interest, the company will sometimes send documents to support the investor’s due diligence, including a term sheet, limit table, corporate documents such as articles of incorporation and articles of association, previous financing documents, contracts, financials , tax returns, etc. ,” he says. Later-stage private companies typically offer a potential investor a link to a data room that includes all of these, says Murphy.

However, “For a company at the stage and value of FTX, fundraising documents are normally detailed legal agreements that include meaningful provisions to protect the investor from fraud and conflicts of interest (now and in the future),” says David Spreng, president, founder and CEO of Runway Growth Capital LLC. “It’s very unusual for a company that raises hundreds of millions of dollars (or with valuations that high) to not have audited financial statements,” Spreng adds. “Most late-stage equity investors and lenders require audits.”

Another factor to consider when it comes to fundraising paperwork is the requirements of the country where the company is located, Qian (Cecilia) Gu, an associate professor at Georgia State’s J. Mack Robinson College of Business told me. University. Gu specializes in venture capital investments. “Regulations matter a lot,” she says. “If you’re based in the Bahamas, then it’s a very different business than it would be if it were based in the United States. The extent to which you disclose information and present your financial data depends on the stage, the industry you are in, the environment and government regulations… This is why we see many companies registering overseas for disclosure purposes.

Perhaps FTX investors were satisfied with a hot spreadsheet. Or maybe they didn’t seem to care because the numbers contained in the spreadsheet were almost too good to be true.

See you tomorrow.

Sheryl Estrada
[email protected]

Big deal

In October, 13 M&A deals were announced in the US banking sector, S&P Global Market Intelligence found. The total deal count so far this year is 139, down from 176 for the same period in 2021, according to the report. The combined value of the deal in October was $1.01 billion, down from $1.50 billion in September. “Bank M&A activity remains hot in the Lone Star State,” S&P Global Market Intelligence said in the report. “Three of October’s announced targets are based in Texas, bringing the state’s total number of deals to 14 in 2022, the second most in any state after Illinois.”

Courtesy of S&P Global Market Intelligence

Go deeper

“The Economic State of Latinos in the United States: Determined to Thrive,” finds a new McKinsey report US Latinos account for the fastest growing part of US GDP. As consumers, Latinos already represent a trillion-dollar market and their purchasing power is on the rise (6% annual growth over the past decade). However, the needs of According to the research, Latino consumers are dissatisfied in many categories of products on offer, from food and beverages to financial products. “If brands address dissatisfaction factors in terms of access and value proposition, a collective revenue of $109 billion is at stake when considering current spend and future potential if improved products are offered,” according to McKinsey.


John Klinger has been promoted to EVP and CFO at The TJX Companies, Inc. (NYSE: TJX), a discount retailer of apparel and home fashion, effective January 29, 2023. Klinger will continue to report to Scott Goldenberg, CFO of the company since 2012. Goldenberg will assume the position of senior executive vice president of finance. Klinger joined TJX in 2000 as Head of Business Analytics at Marmaxx. He held various finance positions within HomeGoods and Marmaxx before being promoted to VP, Divisional CFO for AJWright. Klinger then held the positions of VP of corporate finance and SVP, divisional CFO, TJX Europe. He later became EVP and corporate controller. Prior to joining TJX, Klinger was Chief Financial Officer of Stride Rite.

Ben Halladay was promoted to CFO at Esperion (Nasdaq: ESPR), a pharmaceutical company, effective Nov. 16. Halladay has served as the company’s senior director of financial planning and analysis since August 2022. Prior to joining Esperion in January 2020, Halladay held a variety of finance roles at National Oilwell Varco, BMC Software and Pfizer . At Esperion, he will serve as a member of the executive management team and report to Sheldon Koenig, president and chief executive officer.


“The crazy kids in the garage approach doesn’t work well with blockchain technology. You need governance and risk management and all the stuff that crypto people think is boring.

—Said Pascal Gauthier, CEO of Ledger, a leading provider of hardware wallets for securely storing digital currencies Fortune this is a big lesson from the collapse of cryptocurrency exchange FTX.

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