Scott Pomeroy has spent a career raising and deploying capital across public and private markets, including senior finance roles at Dex Media. During his tenure, Dex Media completed an initial public offering in 2004 involving approximately $1 billion in shares sold. According to his professional biography, he also participated in structuring more than $3 billion in high-yield offerings. Across those very different settings, the same handful of mistakes keep appearing.
Most of them have little to do with the quality of the underlying business. They come from treating capital formation as a series of transactions instead of planning how each financing will support the business over time. Below are six common errors and practices that help companies avoid them.
Mistake One: Raising Money When It Is Needed Instead of When It Is Available
The most expensive capital is often the money a company must raise. When cash runway shrinks to a few months, every investor at the table knows it, and pricing, structure, and terms move against the issuer. Newly public companies are especially exposed because their cash needs often accelerate right after listing, just as they lose the more patient private investors who funded them early.
Disciplined companies plan financings around milestones and favorable market conditions rather than waiting until the bank balance runs low. They raise after a contract win, a product launch, or a strong quarter, when they can show clear progress and demand is highest. Sometimes they raise for no specific reason other than the macro market or sector conditions are favorable to a transaction. Raising capital before funding becomes urgent can give companies greater flexibility to negotiate terms, although the ultimate cost depends on market conditions, financing structure, dilution and the company's financial position.
Mistake Two: Focusing on Price and Ignoring Structure
Founders and boards often fixate on a deal's headline price and the dilution it creates. Dilution matters, but structure often matters more. Convertible notes with resetting conversion prices, heavy warrant coverage, and financing terms that reward short selling can impose costs that don't show up on the day of closing. These instruments can weigh on the share price for months and make the next raise harder.
Scott Pomeroy learned to assess capital structures through his work in accounting and corporate finance. He began his career at KPMG Peat Marwick, advancing from auditor to Senior Manager, and later served as Senior Vice President, Finance and Treasurer of Dex Media, Inc., where he managed billions in high-yield and bank financings and helped execute the company's $1 billion initial public offering. His experience supports a practical rule: accepting a slightly lower price on straightforward terms usually beats a higher price with strings attached. Before accepting any term sheet, management should model what happens if the stock falls short of its terms, not just what happens if it rises.
Mistake Three: Letting the Market Write the Equity Story
Many emerging public companies assume that good results will speak for themselves. They rarely do. If companies don't give investors and analysts a clear way to value the business, those investors and analysts will make their own assumptions. Those assumptions tend to be conservative, especially for companies with limited trading history or unfamiliar business models.
During his tenure as CFO, Pomeroy worked with investors and analysts to explain Dex Media's financial performance, cash flow and valuation considerations. His experience illustrates the importance of consistent investor communication, although share prices are influenced by a range of company-specific and wider market factors.
For smaller public companies, that communication matters even more. A concise investment thesis, consistent quarterly metrics, and a credible explanation of how capital will create value give investors a basis for valuing the business. Without those, a company may have to make its case from scratch with every financing.
Mistake Four: Raising Capital Without a Clear Use for It
Investors want to know what their money will accomplish. A company that raises money "for general corporate purposes" without a clear link to milestones invites skepticism and often ends up spending the proceeds without improving its valuation. A better approach ties each raise to defined outcomes, such as an acquisition, a production ramp, a certification, or a path to positive cash flow, and then reports progress toward those outcomes.
This principle was reflected in Pomeroy’s work at XTI Aerospace, Inc. (Nasdaq: XTIA), where he joined in July 2022 to lead capital-raising initiatives and subsequently served as Chairman and Chief Executive Officer until August 2026. According to his professional account, the company raised more than $100 million through public and private financings during his involvement. Its evolving strategy included the acquisition of Drone Nerds, with financing initiatives linked to acquisition and operational objectives intended to support long-term growth. This approach illustrates the importance of connecting capital-raising decisions to clearly defined business priorities, while recognising that successful financing does not necessarily guarantee increased company value.
Mistake Five: Underbuilding the Finance Function
Going public changes what a company's finance team must deliver. Quarterly reporting, internal controls, audit readiness, and investor communications all arrive at once, often before the team has grown to handle them. Companies that treat these requirements as just another compliance cost frequently stumble: late filings, restatements, or weak guidance can damage credibility faster than any operating setback.
A strong finance team also plays an important role in a company's ability to raise capital. Bankers and institutional investors assess financial reporting quality, internal controls, forecasting capabilities and the experience of senior finance leadership when evaluating potential investments. Strengthening these areas can improve investor confidence and may help companies secure more favourable financing terms, although the cost of capital also depends on market conditions and company-specific risks. Smaller public companies must also consider the regulatory requirements that may affect their financing options. Under the SEC's Form S-3 framework, certain eligible issuers with a public float below $75 million may conduct primary offerings under the “baby shelf” provisions, generally subject to a limit of one-third of their public float over a 12-month period and other applicable conditions. Understanding these requirements helps companies develop realistic capital-raising strategies.
Mistake Six: Treating Bankers and Investors as Vendors
Investment bankers, institutional investors, and analysts aren't interchangeable service providers. Each has different incentives, and companies that overlook those differences often end up with advice that doesn't fit their needs and an unstable shareholder base. A banker paid on deal completion will naturally favor doing a deal. A short-term fund will behave differently from a long-only institution. Neither is wrong, but management needs to know who is in the room and why.
The most effective leaders build relationships with bankers and investors well before they need to raise money. They meet investors when they have nothing to sell, ask bankers for candid feedback on how the market views the company, and carefully consider the shareholder base they want to attract. That groundwork pays off when the company finally goes to market, because both sides already know each other and have begun to build trust.
Turning Capital Formation Into a Strategic Advantage
None of these mistakes is unusual, and none is fatal on its own. Together, though, they help explain why so many emerging public companies trade at valuations that don't reflect their potential. Their businesses may be sound, but they raise money under pressure, accept complicated terms, and leave investors unclear about where the business is headed.
Helping companies address those problems is the focus of Scott Pomeroy's advisory work today. He works with public and soon-to-be-public companies on capital structure, market positioning, and engagement with investment bankers and investors, drawing on experience that spans private and public capital, debt and structured securities, acquisitions, joint ventures, and reverse-merger alternatives. He treats every financing as part of a longer plan, so each raise strengthens the company's position rather than simply extending its runway.
For executives and boards preparing for a listing or managing an already-public company, that means raising money. At the same time, they still have options and are weighing the terms as carefully as the price. It also means explaining how to value the business, tying each raise to milestones, and building a finance team investors can trust. Understanding the incentives of the people across the table belongs in that planning from the start.
About Scott Pomeroy
Based in Colleyville, Texas, Scott Pomeroy is a capital markets strategist and former public-company chief executive with four decades of experience across aerospace, health care, media, consumer products, and financial services. He holds a Bachelor of Business Administration in Accounting, with honors, from the University of New Mexico, and earned his Certified Public Accountant certificate in 1985. Earlier in his career, he served as founding President and Chief Executive Officer of Local Insight Media and The Berry Company, founded Pinnacle Medical Partners, and co-founded Gen3 Financial Services, which provided private financing, capital markets planning, and interim C-suite leadership to growing companies.
Outside his professional work, he has served on the Board of Education of Valor Christian High School for eleven years and operates the Gen3 Foundation. He also mentors younger executives, reflecting a life anchored in faith and service that shapes how he approaches every engagement.
