I often get people coming to StartupCFO after searching for CFO job descriptions. The job of a startup CFO is very different from one at a “big” company. The latter is much more of a hands-off role focused on investor relations, deal making (financing,M & A), governance, reporting and other back office matters. In stark contrast, the startup CFO is much more hands-on and integrated into the day-to-day of the business. Here’s my recipe for a high impact CFO:


Technician: A professional accounting designation (CA, CPA) is the foundation. A few years ago it was all the rage to have MBAs in the top finance role. Having both, I can tell you that an MBA does not begin to cover the accounting, process and tax knowledge needed to steer a company’s finances.


Financier: The high impact CFO not only runs the deal process for fundraising, but should also bring deal flow into the company. She should have a track record of originating and closing debt and equity deals and should have a long list of potential financing sources that are eager to take her call.


Closer: Your CFO should be a key member of your sales team, working at the late stages to help negotiate and close sales.Even before close, the CFO should be actively involved in managing and optimizing your sales pipeline and should be deeply engaged in sales.


Operator: Your CFO should take a leading role in bringing operational excellence into your company. This doesn’t mean bringing in ISO 14001 or whatever the latest flavour is. Instead, it means installing just the right amount of process, reporting and structure. Not so much that it slows you down, but enough so that you smoothly run and grow the machine.


Lawyer: It will be a long time before you have in-house counsel and you don’t want to go to your outside law firm every time you get an NDA to sign. So, choose a CFO who’s very comfortable reviewing legal documents.


Sys Admin: No, you don’t want your CFO troubleshooting Windows on your desktop, but you do want someone who’s sufficiently comfortable in information technology to take the lead in driving your information systems.


Cheapskate: This isn’t usually a problem with CFOs but you want someone who can stretch your $ by knowing which expenses to cut without harming your business.


Consigliere: Your CFO should be a trusted advisor. Running a company can be lonely. Your CFO can be a key, objective source of advice and counsel as you make the big and the small decisions.

As you probably noticed, only one of these points (the 1st one) actually deals with accounting. Despite their accounting beginnings, the best CFOs go far beyond this foundation. They are capable of adding value to every aspect of the business. Judge yours accordingly and make sure you have a high impact CFO.

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  • Neil

    I am looking for a startup CFO for my company. Where should I start looking?

  • vmv

    Hi All,
    I just accepted a job as a cfo of a great startup.. I am jumping into the role directly from professional services so it will be a steep learning curve for the first few months. Does anyone have any recommended reading, podcasts, etc?

  • Sophia

    Hello Mark,

    New to your posting and great articles!

    I am searching for a business model in providing the high performance CFO services you have mentioned in this article but on a contracting basis to startups. There are already numerous professional organizations offering accounting and CFO services. I happen to be one working for a mid size public accounting firm in the San Francisco Bay Area.

    However, our team does not come into place until these startups have gotten funding from the VC firms. Don't get me wrong, we have great success and large numbers of referrals from the VC firms especially with the gaming and mobile apps sector.

    My question, however, remains as to whether opportunity exists before funding i.e. while such startups are working with an incubator or an accelerator. In other words, rather than be reactive and wait for our VC contacts to bring us in, would it make economic sense to develop a pipeline of such pre-funded startups. It does seem like a gamble given the startup's limited capital but if I were to work with the local reputable incubators like QB3 or iGate, there's already a level of screening in place.

    Professional firms have to focus on billings. Perhaps the worst case is where our firm may only break even on the contract CFO services with such early stage startups but we get to offer a variety of our other services such as tax, compliance or business valuation to the ones with success getting funding. This model seems like it's worth exploring. Of course, the down side is our firm may get replaced upon the Series A funding while the VCs bring in their own team(we have been on that side too )

    Want to get your thoughts. It may very well lead to nowhere but it's worth trying;

    Thanks
    Sophia

    • http://startupcfo.ca Mark MacLeod

      Hi Sophia,

      I don't think big professional services firms are the ideal vehicle for this. Too much overhead and partners to pay for.

      What I have seen some startup focused law firms do though is deferred billings coupled with a standard "startup" package. They pick ones they think will get funding, try and get them set up properly and dont bill anything till the company is funded. They end up writing off some of course. But overall it has worked out well. The trick is to pick the ones that will get funded.

      When I was doing this part time, I only worked with companies that had some seed funding already. I had them pay me. If they could not pay in full I did some deferral, but felt it was important that they pay what they could. In my case, I was helping raise the follow on $ so I had full visibility on the risk I was taking.

  • Joachim

    Hello Mark. Nice post. You mentioned CA/CPA designation is a must for a startup CFO. What do you think about CFA designation? It's more oriented towards Investment Finance than Accounting, but would it still give the CFO the good technical knowledge to steer the company in the good direction (or is it nothing close to a CPA)? Thanks!

    • http://startupcfo.ca Mark MacLeod

      Joachim,

      CFA is really more geared to the finance industry. Don't see many CFAs in operating companies.

      Mark

  • Mark MacLeod

    I have to agree

  • Anuya

    Having both, I can tell you that an MBA does not begin to cover the accounting, process and tax knowledge needed to steer a company’s finances..Condominiums Mississauga

  • Anuya

    Having both, I can tell you that an MBA does not begin to cover the accounting, process and tax knowledge needed to steer a company’s finances..Condominiums Mississauga

  • Mark MacLeod

    Heri, It's easy to find the best ones, because you'll either hear people talk about them or their names will come when you ask, or they will find you (because they're committed to your space). Getting the best ones involved in your company is a bigger challenge because they're usually employed when you find them.

  • Jeffrey

    Mark, good commentary and it definitely hits on the main points. You're right, CFO's within a start-up wear so many different hats and any finance lead who only has his technical accounting skills to fall back on will end up failing.

  • heri

    Great post. I was wondering how you could actually find this type of high-performance CFO? is it just pure networking? or is there a place (online or offline) where they typically "hang out" and where you can get hold of one?