For most successful startups, hiring a CFO becomes a priority when investors begin to embrace more significant funding. Positive progress creates good problems to solve—the startup has matured enough that it needs more formalized roles, responsibilities and operations to keep moving forward.
Establishing actionable milestones for the CFO’s road map is another effective approach.
The role of startup CFOs goes well beyond managing the company’s finances. They must clear a path for growth, form new relationships, drive measurable value, and establish core financial processes and reporting requirements.
In interviews with KPMG, CFOs at venture capital-backed companies described their biggest challenges, as well as what they learned, what they might do differently next time, and what they wish they had known.
Understanding the new role
Every startup has different expectations for its CFO, and the best way to deliver those expectations is to establish a real partnership with the CEO. This is especially true when the CEO is also the founder.
“VC investors often expect the CFO to be a mentor to the CEO, particularly when they are a founder with deep product or technical talent,” said one CFO. “In some cases, the CFO may need to take on the traditional CEO activities so that their CEO can focus on the things they are amazing at doing.”
Often, the CFO must fill in the blanks—key functions that were OK to be sidelined while the company was in its initial growth period.
“CEOs and founders have spent so long selling the story and focusing on revenue growth that they often lose track of the other financials—key fundamentals like unit economics, leverage and cash position,” said another CFO. “That’s where a good CFO steps in.”
CFOs also need a clear understanding of the board and its objectives. “If the CEO won’t spend a few hours going through the board deck with me, I’m not taking the job,” said a CFO.
Developing trust, encouraging collaboration
The most successful CFOs quickly earn the trust and respect of the CEO, board and management team by establishing a collaborative relationship.
“The CFO influences the rest of the C-suite by driving the metrics and presentation of results,” said one CFO. “They hold the management team accountable with facts. You need to be able to balance the role of being the CEO’s ‘enforcer’ against being a trusted advisor to the rest of the C-suite.”
Frequent, transparent communications about the company’s finances are also essential. “Venture capital investors expect to see the numbers more often than just the board meetings,” said a CFO. “That’s how you avoid surprises, provide context and ensure that board meetings are as productive as possible.”
Building the company’s capabilities
Growth companies expect their new CFO to deliver immediate value and contribute to long-term objectives—while finding the right mix of business flexibility to bridge the two.
“Particularly when it comes to financial processes and controls, you need to be able to look across multiple horizons,” said another CFO. “You need to know what you have today, what you will need in the medium term, and how you will get from here to there. You need a really smart and well-integrated road map.”
Turning strategy into operations
Establishing actionable milestones for the CFO’s road map is another effective approach.
“My early focus is on prioritizing the issues and dealing with cash flow and risk assessments,” said one CFO. “But then I’ll quickly move on to more strategic levers that will move the needle for the business.”
For many startup CFOs, one of the first items on their agenda will be new rounds of funding and financing. “It’s worth thinking about early,” said a CFO. “Fundraising always takes longer than anticipated.”
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