In this next instalment of our series focusing on each of the key scale-up leadership roles, we take a more detailed look at the role of the Chief Financial Officer (CFO).
The role of a scale-up CFO is very different to its corporate counterpart. In a high-growth environment, the CFO must possess the skills and mindset to both facilitate scale and keep up with the pace of it. Appointing someone who can rise to this challenge can be the difference between success and failure – so it is important to get this hire right.
Typical scaleup CFO responsibilities may include:
- Developing, implementing and managing robust and scalable internal controls and processes
- Managing financial and non-financial risks while upholding governance and compliance to the highest standard
- Preparing budgets, management accounts and management information, and reporting/presenting to the Board and shareholders
- Preparing regulatory statements, reports, and filings
- Capital raising and management of investment
- Developing an exit strategy
- Overseeing any M&A or JV activity, and undertaking the necessary due diligence
- Building and managing a Finance team
- Leading all financial planning and analysis (FP&A) activity
- Implementing robust forecasting and planning models to support the growth strategy
- Introducing relevant financial metrics and controls
- Providing input into company structuring
- Tax planning and accountancy
Most scale-up leaders do not come from a financial background and when the time comes to appoint a full time CFO (usually around Series A stage), they may not think too far beyond ensuring their candidate has the relevant accounting qualifications and credible experience. A CFO resumé that references major corporates or esteemed accountancy firms may be enough to impress – but the ability to thrive and succeed in an entrepreneurial environment is a key factor that must not be overlooked.
The simple solution is to find a CFO that has done it before: those who have worked in start-ups and taken them through commercialisation, growth and possibly onto an exit. Indeed, there are CFOs who relish the challenge of scale and have been on this journey several times in their career. They understand how to align financial management with the complexities of rapid growth, when and how to raise funds, and how to prepare the business for an exit.
However, this doesn’t necessarily mean that candidates without scale-up experience should be discounted. Someone from a corporate background can still be an effective hire – combining robust financial leadership with the experience to implement improved systems and processes. Furthermore, there are many corporate CFOs who are enticed by the prospect of moving to a growing venture where they can have a tangible impact. The key is to separate those who want to do it, from those who actually can – so the interview process must really test their appetite and ability to operate in the entrepreneurial ecosystem.
Regardless of background, the relationship between the CEO and CFO is an important and often close one. The right CFO will enable the company’s vision but will also challenge it when necessary. As such, exploring aspects such as personality fit and communication style at interview stage is a key part of the hiring process.
Of course, finding the right candidate is only one side of the coin - attracting and securing that person can be equally (if not more) delicate. Some of the key factors in attracting a CFO include:
This can prove to be a major frustration for scale-up CFOs as some have joined ventures on the promise of imminent commercial acceptance only to be disappointed. This, in turn, can lead to delays in other plans – such as an exit – which may have been a defining factor in their decision to join the business. However, if a company has proven itself to have an innovative, market-ready technology, it has the potential to be a major attraction to a CFO candidate.
Most CFOs are astute in identifying and evaluating the risk profile of a venture – and, for this reason, there is often a higher level of risk-aversion seen in candidates for this role. Nevertheless, these fears can be allayed if the company has a clear and realistic growth strategy – especially if this is combined with the support of experienced and committed investors.
A powerful motivator for many CFOs is the prospect of gaining equity in a business that is poised for a potentially lucrative exit. With this in mind, CFO candidates are often keen to understand how realistic and robust the company’s exit strategy might be. Many CFOs are forensic in their due diligence before accepting a role and, as such, transparency during the advanced interview stage is often key to securing a successful appointment.
If you need help hiring a CFO for your scaleup, get in touch
For more information on scaleup CFO compensation, please download our latest salary report: