The Value of Senior Finance Talent to Startups
When considering what factors are most likely to determine the viability of a startup, the strength of your finance talent isn't necessarily the first thing to come to mind. Many companies traditionally prioritise functions that directly drive revenue in early stages of growth, such as sales or product development. But finance expertise possesses unique utility for your company. It isn’t just about maintaining a P&L sheet - the right CFO hire can have a transformative effect on the chances of a startup's success.
Growth
At its best, senior finance can play a pivotal role in start-up growth. This is true not just of generating insight that informs business strategy, or creating dashboards that make that information easily digestible for non-finance personnel, but also of the more day-to-day aspects of finance, such as managing cashflow. The CFO that can stretch every penny, make every asset work and consistently secure the best deal available is worth their weight in gold.
As the person most closely familiar with and best able to interpret the company financials, the CFO has unique insight and responsibility to manage risk, arguably more so than anyone in the business. It is crucial, therefore, for them to have strong relationship-building and communication skills, particularly when it comes to the CEO.
Combine high-calibre risk-perception and rapport-building skills, and you have an invaluable asset to the company - someone who can act as a confidant to the CEO and offer them highly valuable insight and advice, but also persuade them to rein in some of their more adventurist instincts.
Of course, not all start-ups have sufficient funds to employ a full time CFO or Finance Director. This is undoubtedly one of the most pressing challenges of navigating the early period of start-up growth - distributing limited resources as efficiently and effectively as possible.
But it does not mean you have to forgo the benefits of finance expertise. In fact, there is a growing pool of talented portfolio CFO and FDs, much of which have experience of overseeing finance at start-ups that have succeeded.
Not only will they be able to provide you with key elements of financial insight to keep your business strategy as finely-tuned as possible, they will also be able to draw on their knowledge and familiarity with the obstacles you are currently facing and will do in the near future. If this is your first time running a start-up, this experience is invaluable.
Fundraising
Nowhere is the input of an excellent CFO more important than when start-ups are looking to attract outside investment. The complex and granular activity of the tasks associated with fundraising requires the specific skills of senior finance, who will undoubtedly understand KPIs and investor needs best, and will be adept at preparing the information required by venture capital businesses before investment. Ideally, your CFO will have experience of directly managing successful fundraises previously.
Direct experience also offers other benefits, not least of which is pre-existing presence in investor circles and a network that can be leveraged to your start-up’s advantage. A CFO who can make introductions and get you in a room with the right people could potentially be the difference between securing the investment that transforms your company’s trajectory and missing out.
The utility of a quality CFO’s relationship skills doesn’t end there. Once investment is secured, they will often act as the primary conduit between a start-up’s management, particularly its CEO, and outside investors. Keeping open communication and successfully overcoming obstacles while maintaining harmonious relations can decide whether an investment proves successful or not.
Scaling up
Once a start-up’s business model has proven its viability and the company looks to expand rapidly, the CFO will need to successfully execute an expansion of the finance function.
An important part of this is bringing in new people to handle the day-to-day elements of finance, so that senior finance can take a more strategic focus
But making new hires is only one area of finance function evolution - it also means expanding reporting procedures, automating transactional finance processes and increasing the sophistication of commercial finance capacity, such as providing business partnering to other functions in the company.
However, the CFO’s responsibility and impact during such a period of comprehensive change is hardly limited to their own function alone. Rapid growth means expanding costs, so a good CFO will look to cut costs wherever possible, and push to make changes that will cut overhead and allow the business to invest in expansion. This means automating processes and cutting out any waste in company structure. The CFO’s vigilance will ensure that no obvious areas for improvement are missed, and the company’s growth is maximised as a result.
Camino Search works with cutting-edge businesses to find the perfect finance hires for them. With more vacancies than ever, competition has never been fiercer over the highest-calibre candidates. We can use our extensive network to find your next position, or fill that role in your team with a sharp, reliable hire. Get in touch today: