👋🏾 Hi friends!

OK, 20 editions in, how the heck did we get here!?

I have to be honest, I wasn’t sure where I would get to with this newsletter, but am enjoying putting it out there and seeing where it goes.

As with so much of my life, it’s about overriding my ADHD to get to consistency and building ‘muscle’ around writing regularly and trying to improve a little more every time 💪 

Now let’s get down to business…

In this weeks Off Balance, I’ll be chatting about:

🧮 What it takes to be a startup CFO
🛹 Startup boards - what you need to know.

Also, in this week’s Nothing Ventured, I spoke to Sam Beni; Sam was the Head of Innovation at Tech Nation where he continues, post acquisition by Founders Forum, as Strategic Advisor and has just dived into his umpteenth startup Platin. We talk about coming to the UK as a refugee, not being able to take a salary and having his shares held by a cofounder in trust and much more besides.

As always, our Primer episode gives you a bit of background on how he got to where he is today 💪 

Also, if you have any feedback, or if there’s something you’re desperate to see me include, just reply to this mail or ping me online - I’m very open to conversations.

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(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

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Now let’s get into it.

How can did I add value?

I had some unexpected and really great feedback on last week's section where I discussed small cheque investing, it turns out there are other people out there facing a similar conundrum who found the ‘advice’ really useful in terms of getting off the ground as an angel.

One of the other things I am consistently asked about is how to get into CFO’ing at startups, most recently by someone who has been in large corporates and PE backed businesses in FP&A roles before launching a couple of startups of his own.

The problem is that whatever role you’ve held in a larger business, the likelihood is that you will have been one of a team of several people delivering a specific outcome for your division.

However, a startup CFO is a leadership role. One where you are expected to have the answers, and it’s unlikely that you’re going to be able to rely on someone else to give you the answer (because let’s face it, the most likely scenario is that it’s just you in finance.

So I started thinking about codifying what it means to be a startup CFO, not only so people can use it as a checklist to see if they’re ready, but one that I can use myself as I continue to grow my team of fractional VC backed CFOs too.

I am fond of saying that becoming a CFO is not something that you qualify towards, rather it is built from the experience you have built up. So this is not just a list of knowledge you need to have, but skills you have acquired over the course of (probably) one to two decades working in finance and startups - and I would argue whatever you might have done outside a startup counts very little once you get into one!

💸 Strong understanding of capital flows from revenue, investment, debt, working capital and impact on business.
This is the essence of being a CFO. If you don’t understand how cash flows and feeds the venture you’re working in, and how movements in cash can drive outcomes in your business, then you are unlikely to be ready for the CFO slot.

📊 Ability to identify, define and set KPIs / leading metrics to track and course correct.
Knowing what drives the business (outside of pure financial metrics) is a critical role of the CFO. You are the person that founders (and leadership teams) come to to help them understand how the business is performing and how they can scale further.

💻 Ability to build out data and metrics driven financial models and scenario plans.
Lots of CFOs who have come out of larger organisations tell me that it’s been several years since they spent any time in an excel model, they have FP&A teams for that. Sadly this is one of the primary things a startup CFO is asked to do - I think I would have spent more time messing about with models than in any other area of any of the ventures I have worked with. Again, it goes back to the fact that you likely won’t have a (large) team, so you need to be able to do the work.

📈 Strong understanding of growth playbooks - market, product, geographical, acquisition etc.
Your role as CFO is to help build the systems, processes and financial strategy that allow the business to scale. In order to understand that, you need to understand other areas of the business, the playbooks they use, or, will use to scale so that you can feed that back into your cash planning - all of which impacts runway, burn, capital needs and hiring plans.

💰 Experience raising capital both equity and debt.
You can be a CFO if you don’t have an accounting qualification, but you can’t really be one if you don’t have experience raising capital. This doesn’t mean that you need to have personally found the investor / debt provider and closed the deal (in a startup it’s always the founder / CEO that is responsible for ‘selling’ the vision); what it means is having experience raising large amounts, understanding term sheets, looking at economic and control factors and more.

🤝 Experience of M&A.
Whilst not essential in my opinion, having an understanding of mergers and acquisitions is incredibly valuable as a startup CFO. You will likely be involved in discussions around acquisitions at various stages of the company’s life (heck, I just spoke to founders of a seed stage venture who have already completed one strategic acquisition!), again, understanding how to review and assess other businesses and their fit as an acquisition is really valuable.

💼 Experience of exits to a strategic acquirer.
This and IPO experience are not pre-requisites as a startup CFO at the earlier stages (pre late growth, i.e. Series C and beyond), but obviously having that experience and understanding how the process works will be really useful to the leadership team if they get to the stage where a strategic exit is on the table.

💹 Experience of IPOs valuable.
Obviously this is the pinnacle of a CFO’s journey, getting to ring the bell at a significant stock exchange having navigated the successful listing of the startup. But let’s face it, again, not only is it less neccessary at the earlier stages, but there is only a narrow cohort of CFOs that are likely to have had this experience at all.

🌐 Good network of liquidity providers (VCs, angels, debt etc.).
Whilst I said that it wasn’t necessary to be able to close the funding, you definitely want to be seen as someone that knows where to go to get funded. Whether you have networks of investors or financiers able to provide debt financing, this is something that most founders will look for in a great CFO.

👨🏾‍💼 Strong board management and governance skills.
As we’re about to see below, navigating boards can be tough (Open AI anyone?). CFOs are often critical in the provision of information to directors and more often than not may sit on the board themselves, even if only as an observor. Understanding how to manage a board as well as understanding the duties of a director so that you can provide guidance to founders is a huge part of being a good CFO.

🤑 Strong investor management skills. 
Having raised the capital, you need to know how to manage investors (and debt providers). This is about regular communication, providing the right information without necessarily providing too much and balancing ensuring that investors have full knowledge of progress without necessarily opening the door to a tonne of questions, remembering all the time that you may be back at their door soon enough looking for additional funds…

🔢 Data / BI knowledge.
The office of the CFO has moved beyond ‘just’ finance. CFOs are often the custodians of the business’ data operations. Therefore having a good understanding of how to find, clean, use, process and present data are essential skills for modern CFOs. Which means that there are some up and coming finance folk that have the edge on some of us slightly more ‘advanced in years’ 😂 

📜 Understanding of accounting + policies around revenue recognition etc.
As I said at the top, you don’t need to be a qualified accountant per se, but you do need to understand key policies as, more likely than not, you’re going to have to ensure you are on solid ground when talking to auditors, investors and even internal stakeholders - many of whom won’t understand why accounting is so quirky - because any shocks to the system could have dramatic consequences.

📧 Strong communication skills across all stakeholders, ability to translate Numbers into Narrative and guide strategy.
If you’ve followed me for any length of time, you will know that I am a strong believer that being a CFO is strongly skewed towards your ability to communicate, not just be numerate. Why is this? Because CFOs are part of the exec team. Collectively the exec team is responsible for selling, whether to investors, to employees, to clients or to any other stakeholder that may land on the doorstep. It would not be particularly useful to have a CFO who could do the numbers but couldn’t sit in front of an investor and explain not only what the numbers are telling us today, but where they could go tomorrow.

⚒️ Systems and Tech.
Let’s face it, in today’s environment - and especially when working in a tech venture - a critical skill is understanding what tools are out there that can make your business more efficient. Whether that’s at the transactional level looking at cloud based ERPs, payment gateways, spend management platforms or at the more strategic end of the scale looking at FP&A, forecasting, cash planning, cap table management or even building internal tools to help the business grow.

So there you have it, my attempt to codify what it is to be a great startup CFO operating in the venture ecosystem. Do you think I’ve missed anything? Just hit reply and let me know!