EmergeONE - The When, Why and How of Startup CFOs
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The document discusses the importance of building the right finance team for a startup as it grows. It recommends bringing on a strategic finance lead like a CFO earlier rather than later, as their expertise can help at various stages from raising funds to international expansion. Key triggers for considering a CFO include opening a funding round, achieving product-market fit, and adding institutional investors. While costs vary, surveys found average CFO salaries of £90-150k in the UK. The conclusion emphasizes that the right finance stack is critical for success and to use growth stage and triggers as guides for when to invest in strategic finance leadership.
EmergeONE - The When, Why and How of Startup CFOs
- 1. © COPYRIGHT EmergeONE Ltd 2020 Fifteen minute finance for founders The When, Why and How of Startup CFOs
- 2. © COPYRIGHT EmergeONE Ltd 2020 Intro
- 3. © COPYRIGHT EmergeONE Ltd 2020 Why are we here today? ● To share some knowledge and learn something (hopefully) new! ● To understand the importance of your finance stack for you as you scale ● To highlight different roles in your finance stack, from finance ops through to strategic finance ● To give you some simple guidelines on: ○ When to bring on board your first startup CFO ○ Why you should bring one on board in the first place ○ How to find them, and importantly some mistakes to avoid
- 4. © COPYRIGHT EmergeONE Ltd 2020 Why getting your finance stack right matters ● Finance plays an important role across all parts of your venture from payroll to product, from rent to revenue. ● Cash is always king, knowing how long it lasts, how to make it last longer and where to find more is critical. ● Finance provides information both internally and externally that underpins accurate decision making.
- 5. © COPYRIGHT EmergeONE Ltd 2020 Why EmergeONE?
- 6. © COPYRIGHT EmergeONE Ltd 2020 I’m Aarish, I’ve spent the last 15 years working in SMEs in some of the toughest environments in the world (yes, including London!). For the last 5 years, I, and now the EmergeONE team, have been working with startups, investors, founders and others to help ventures grow. Our team have collectively raised £10s of millions, and we have helped our clients grow their businesses, raise debt and equity capital from angels and institutional investors and navigate the tough times that come as you scale.
- 7. © COPYRIGHT EmergeONE Ltd 2020 What We’re Going to Talk About
- 8. © COPYRIGHT EmergeONE Ltd 2020 The Basics - What are the different types of finance roles in a venture and how they flex as you scale. Why getting the right finance stack in place is crucial for success. What’s the ideal time to bring in a strategic finance lead like a CFO. What triggers that need and how to think about the different solutions that exist. How to go about bringing one on board and importantly, what to avoid. Questions?
- 9. © COPYRIGHT EmergeONE Ltd 2020 The Basics
- 10. © COPYRIGHT EmergeONE Ltd 2020 The Finance Stack
- 11. © COPYRIGHT EmergeONE Ltd 2020 Finance Ops v Strategic Finance
- 12. © COPYRIGHT EmergeONE Ltd 2020 Finance Ops v Strategic Finance
- 13. © COPYRIGHT EmergeONE Ltd 2020 Finance Ops v Strategic Finance
- 14. © COPYRIGHT EmergeONE Ltd 2020 Roles: CFO, VP Finance Roles: Head of Finance, Finance Director Roles: Management Accountant, Controller Finance Ops v Strategic Finance Roles: Bookkeeper, Clerk, Assistant
- 15. © COPYRIGHT EmergeONE Ltd 2020 Bias to Finance Ops Growing need for Strategic Finance F u l l S t a c k F i n a n c e Time Scale Evolution of Your Finance Stack as you Grow
- 16. © COPYRIGHT EmergeONE Ltd 2020 OK, But Why Does it Matter?
- 17. © COPYRIGHT EmergeONE Ltd 2020 Finance Touches Almost Everything in a Venture... Based on 80 startups interviewed via https://www.failory.com/blog/startup-failure-rate
- 18. © COPYRIGHT EmergeONE Ltd 2020 Problem How Finance Can Help Stop or Resolve Marketing - Product Market Fit Finance can help vet and validate business model early. Team Problems - Business Knowledge The right finance head brings variety of experience. Finance Problems Well, obvs :) Tech Problems - Over investment Balances spend against return. Operational / Legal Finance typically has experience in these matters and can spot issues before they arise. ...And Here’s How it Helps
- 19. © COPYRIGHT EmergeONE Ltd 2020 Got It, So What Do I Do Now?
- 20. © COPYRIGHT EmergeONE Ltd 2020 Bias to Finance Ops Growing need for Strategic Finance F u l l S t a c k F i n a n c e Time Scale In Finance, as in Comedy, Timing is Everything
- 21. © COPYRIGHT EmergeONE Ltd 2020 Your Finance Team As You Grow Type of Finance Early Stage / Pre Rev Post Rev / Seed Growth Scale Finance Ops Need for basic, transactional support and ‘finance hygiene’ Source Strategic Finance Little need, light touch advisory Source
- 22. © COPYRIGHT EmergeONE Ltd 2020 Type of Finance Early Stage / Pre Rev Post Rev / Seed Growth Scale Finance Ops Need for basic, transactional support and ‘finance hygiene’ Source Outsourced to accountants Strategic Finance Little need, light touch advisory Source Advisor Your Finance Team As You Grow
- 23. © COPYRIGHT EmergeONE Ltd 2020 Type of Finance Early Stage / Pre Rev Post Rev / Seed Growth Scale Finance Ops Need for basic, transactional support and ‘finance hygiene’ More structured, experienced operational support Source Outsourced to accountants Strategic Finance Little need, light touch advisory Growing need for strategic advice Source Advisor Your Finance Team As You Grow
- 24. © COPYRIGHT EmergeONE Ltd 2020 Type of Finance Early Stage / Pre Rev Post Rev / Seed Growth Scale Finance Ops Need for basic, transactional support and ‘finance hygiene’ More structured, experienced operational support Source Outsourced to accountants Part time or Full time Strategic Finance Little need, light touch advisory Growing need for strategic advice Source Advisor Part time Your Finance Team As You Grow
- 25. © COPYRIGHT EmergeONE Ltd 2020 Type of Finance Early Stage / Pre Rev Post Rev / Seed Growth Scale Finance Ops Need for basic, transactional support and ‘finance hygiene’ More structured, experienced operational support Finance ops critical to ensuring structures in place to scale Source Outsourced to accountants Part time or Full time Strategic Finance Little need, light touch advisory Growing need for strategic advice Ongoing need Source Advisor Part time Your Finance Team As You Grow
- 26. © COPYRIGHT EmergeONE Ltd 2020 Type of Finance Early Stage / Pre Rev Post Rev / Seed Growth Scale Finance Ops Need for basic, transactional support and ‘finance hygiene’ More structured, experienced operational support Finance ops critical to ensuring structures in place to scale Source Outsourced to accountants Part time or Full time Full time Strategic Finance Little need, light touch advisory Growing need for strategic advice Ongoing need Source Advisor Part time Part time → Full time Your Finance Team As You Grow
- 27. © COPYRIGHT EmergeONE Ltd 2020 Type of Finance Early Stage / Pre Rev Post Rev / Seed Growth Scale Finance Ops Need for basic, transactional support and ‘finance hygiene’ More structured, experienced operational support Finance ops critical to ensuring structures in place to scale Finance ops needs to be maintaining ‘business as usual’ Source Outsourced to accountants Part time or Full time Full time Strategic Finance Little need, light touch advisory Growing need for strategic advice Ongoing need Required Source Advisor Part time Part time → Full time Your Finance Team As You Grow
- 28. © COPYRIGHT EmergeONE Ltd 2020 Type of Finance Early Stage / Pre Rev Post Rev / Seed Growth Scale Finance Ops Need for basic, transactional support and ‘finance hygiene’ More structured, experienced operational support Finance ops critical to ensuring structures in place to scale Finance ops needs to be maintaining ‘business as usual’ Source Outsourced to accountants Part time or Full time Full time Full time Strategic Finance Little need, light touch advisory Growing need for strategic advice Ongoing need Required Source Advisor Part time Part time → Full time Full time Your Finance Team As You Grow
- 29. © COPYRIGHT EmergeONE Ltd 2020 What other Triggers Should I Look Out For? Trigger Opening a Round Value of a CFO Financial Model, pitch deck, source investors, set up data room
- 30. © COPYRIGHT EmergeONE Ltd 2020 What other Triggers Should I Look Out For? Trigger Opening a Round Closing a Round Value of a CFO Financial Model, pitch deck, source investors, set up data room Negotiate with investors, compliance and filings, manage DD and legal
- 31. © COPYRIGHT EmergeONE Ltd 2020 What other Triggers Should I Look Out For? Trigger Opening a Round Closing a Round Setting Business Model Value of a CFO Financial Model, pitch deck, source investors, set up data room Negotiate with investors, compliance and filings, manage DD and legal Evaluate and input into revenue / pricing models, test assumptions, understand unit economics
- 32. © COPYRIGHT EmergeONE Ltd 2020 What other Triggers Should I Look Out For? Trigger Opening a Round Closing a Round Setting Business Model Product / Market Fit Value of a CFO Financial Model, pitch deck, source investors, set up data room Negotiate with investors, compliance and filings, manage DD and legal Evaluate and input into revenue / pricing models, test assumptions, understand unit economics Scaling inflection point, understand resource allocation, cash needs and operational constraints
- 33. © COPYRIGHT EmergeONE Ltd 2020 What other Triggers Should I Look Out For? Trigger Opening a Round Closing a Round Setting Business Model Product / Market Fit Institutional Investors Value of a CFO Financial Model, pitch deck, source investors, set up data room Negotiate with investors, compliance and filings, manage DD and legal Evaluate and input into revenue / pricing models, test assumptions, understand unit economics Scaling inflection point, understand resource allocation, cash needs and operational constraints Managing investors, providing metrics and performance reporting, managing and scenario planning cap table
- 34. © COPYRIGHT EmergeONE Ltd 2020 What other Triggers Should I Look Out For? Trigger Opening a Round Closing a Round Setting Business Model Product / Market Fit Institutional Investors Formal Board Value of a CFO Financial Model, pitch deck, source investors, set up data room Negotiate with investors, compliance and filings, manage DD and legal Evaluate and input into revenue / pricing models, test assumptions, understand unit economics Scaling inflection point, understand resource allocation, cash needs and operational constraints Managing investors, providing metrics and performance reporting, managing and scenario planning cap table Ensuring robust governance and controls, reporting on performance and inputting on strategy
- 35. © COPYRIGHT EmergeONE Ltd 2020 What other Triggers Should I Look Out For? Trigger Opening a Round Closing a Round Setting Business Model Product / Market Fit Institutional Investors Formal Board International Growth Value of a CFO Financial Model, pitch deck, source investors, set up data room Negotiate with investors, compliance and filings, manage DD and legal Evaluate and input into revenue / pricing models, test assumptions, understand unit economics Scaling inflection point, understand resource allocation, cash needs and operational constraints Managing investors, providing metrics and performance reporting, managing and scenario planning cap table Ensuring robust governance and controls, reporting on performance and inputting on strategy Understanding local compliance issues, setting up structures, transfer pricing and other tax planning and leading on governance
- 36. © COPYRIGHT EmergeONE Ltd 2020 What other Triggers Should I Look Out For? Trigger Opening a Round Closing a Round Setting Business Model Product / Market Fit Institutional Investors Formal Board International Growth M&A Value of a CFO Financial Model, pitch deck, source investors, set up data room Negotiate with investors, compliance and filings, manage DD and legal Evaluate and input into revenue / pricing models, test assumptions, understand unit economics Scaling inflection point, understand resource allocation, cash needs and operational constraints Managing investors, providing metrics and performance reporting, managing and scenario planning cap table Ensuring robust governance and controls, reporting on performance and inputting on strategy Understanding local compliance issues, setting up structures, transfer pricing and other tax planning and leading on governance Identifying potential targets for acquisition (or acquirers), evaluating deals, negotiating price, managing process
- 37. © COPYRIGHT EmergeONE Ltd 2020 What Makes For a Good CFO in Venture? Trait to look out for Relevant qualification Experience in startups / growth Good at ‘Sales’ Experience across different models Generalist and growth mindset Strong spreadsheet / modelling skills, experience with software solutions Strong leader and communicator Has a network
- 38. © COPYRIGHT EmergeONE Ltd 2020 What’s it Gonna Cost Me? In a private survey of 100 finance professionals operating in early stage ventures showed: Role Seed Series A / B Series C → CFO (average base salary) £90,000 £125,000 £150,000 FD (average base salary) £90,000 £100,000 £100,000 Portfolio (average day rate) £550 - £850 £550 - £925 No data
- 39. © COPYRIGHT EmergeONE Ltd 2020 Wrapping It All Up Getting your finance stack, especially your people, right is critical to the success of your venture.
- 40. © COPYRIGHT EmergeONE Ltd 2020 Wrapping It All Up Getting your finance stack, especially your people, right is critical to the success of your venture. There is never a ‘right time’ to bring on your first strategic finance lead, but waiting for the right time might cost you big time.
- 41. © COPYRIGHT EmergeONE Ltd 2020 Wrapping It All Up Getting your finance stack, especially your people, right is critical to the success of your venture. There is never a ‘right time’ to bring on your first strategic finance lead, but waiting for the right time might cost you big time. Use your stage of growth and certain trigger points as a guide to when you should bring on a CFO or FD.
- 42. © COPYRIGHT EmergeONE Ltd 2020 Wrapping It All Up Getting your finance stack, especially your people, right is critical to the success of your venture. There is never a ‘right time’ to bring on your first strategic finance lead, but waiting for the right time might cost you big time. Use your stage of growth and certain trigger points as a guide to when you should bring on a CFO or FD. Does it makes sense to bring on full time resource vs a part time resource, no hard and fast rule but cost, need and scale are the main factors.
- 43. © COPYRIGHT EmergeONE Ltd 2020 Wrapping It All Up Getting your finance stack, especially your people, right is critical to the success of your venture. There is never a ‘right time’ to bring on your first strategic finance lead, but waiting for the right time might cost you big time. Use your stage of growth and certain trigger points as a guide to when you should bring on a CFO or FD. Does it makes sense to bring on full time resource vs a part time resource, no hard and fast rule but cost, need and scale are the main factors. To get value out of a strategic finance resource, make sure finance operations is in good shape, don’t pay for an overqualified, expensive bookkeeper!
- 44. © COPYRIGHT EmergeONE Ltd 2020 Wrapping It All Up Getting your finance stack, especially your people, right is critical to the success of your venture. There is never a ‘right time’ to bring on your first strategic finance lead, but waiting for the right time might cost you big time. Use your stage of growth and certain trigger points as a guide to when you should bring on a CFO or FD. Does it makes sense to bring on full time resource vs a part time resource, no hard and fast rule but cost, need and scale are the main factors. To get value out of a strategic finance resource, make sure finance operations is in good shape, don’t pay for an overqualified, expensive bookkeeper! As with any senior hire, qualities, experience and culture trump qualifications alone, take your time.
- 45. © COPYRIGHT EmergeONE Ltd 2020 Wrapping It All Up Getting your finance stack, especially your people, right is critical to the success of your venture. There is never a ‘right time’ to bring on your first strategic finance lead, but waiting for the right time might cost you big time. Use your stage of growth and certain trigger points as a guide to when you should bring on a CFO or FD. Does it makes sense to bring on full time resource vs a part time resource, no hard and fast rule but cost, need and scale are the main factors. To get value out of a strategic finance resource, make sure finance operations is in good shape, don’t pay for an overqualified, expensive bookkeeper! As with any senior hire, qualities, experience and culture trump qualifications alone, take your time.
- 46. © COPYRIGHT EmergeONE Ltd 2020 Questions?
- 47. © COPYRIGHT EmergeONE Ltd 2020 Thanks for listening! https://www.linkedin.com/in/adsinuk @adsinuk aarish@emergeone.co.uk Contact me (Aarish Shah) EmergeONE https://www.linkedin.com/company/emergeone @EmergeONE_UK www.emergeone.co.uk