Comments on CFOs in startups: you need to OWN the cash problem

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08/16/10--05:43: Rory commented on 'CFOs in startups: you need to OWN the cash problem' (chan 1391823)

In my experience a real senior CFO will also look to implement reporting systems and process that is out of kilter with startup business requirements. Often the legal work also comes under the CFO and if they are from a large company you can quickly rack up pointlessly large bills on legal work with no real requirement for it. Key is cash collection and "just enough" reporting to stay on top of the business.





08/16/10--06:03: twitter.com/startupcfo commented on 'CFOs in startups: you need to OWN the cash problem' (chan 1391823)

Hey Fred, I have led finance for VC-backed startups for the last 11 years, and as I prepare to move to the investment side as well, I definitely have some thoughts on this.

It is true that a startup does not need a senior or "real" CFO until its big, but to me the ideal time to bring in a CFO is right before 1st institutional funding. BUT, that CFO should be part time. Having someone with startup, fundraising, governance and exit experience from the 1st time there is institutional money in can have a big impact on the founder. When the founder becomes a consumer of info vs a producer it changes his perspective.

Also, because I get involved with young startups I see the same issues come up often and able to help them make better choices, hires, etc.

Finally, while an entrepreneur should delegate cash responsibility, they should not abdicate it. I expect a good entrepreneur to always know burn and runway.




08/16/10--10:31: herve commented on 'CFOs in startups: you need to OWN the cash problem' (chan 1391823)

Great Point. It reminds me a quote in Jessica Livingston's "Founders at Work" (page 330). Here it is : “Fundamentally, if you have a lemonade stand, you have to sell your lemonade for more than it costs you to make. That’s really all you need to know to run a company.” So I just wonder if this not true also for the CEO role. Don't you think that ideally the founder(s) should run the show, define the vision and he/they may need some grey hair people for operations but not that soon in the process...




08/16/10--11:02: Fred Destin commented on 'CFOs in startups: you need to OWN the cash problem' (chan 1391823)

@Herve: I agree with you on letting the CEO run with what he's best at, my point is that the one issue that always comes back to rest with him is whether his company is funded and his team has a paycheck, and that you can never outsource the ultimate responsibility to anyone





09/01/10--19:02: Johnmccarthy commented on 'CFOs in startups: you need to OWN the cash problem' (chan 1391823)

"no ones gives a s*** about your EBITDA and your reporting when you're a startup"

I agree with most of what you wrote, but to be that flippant about proper financial statements and reporting sets a bad tone for corporate governance and encourages Cowboy like behavior. Most entrepreneurs I have dealt with need no encouragement to avoid proper financial reporting. The good VCs I have dealt with require it for both the disciplined mind set it encourages and fact that it allows for a common language (the language of business) to be used in discussing with investors and management such quaint issues like sales, revenue and profitability.




09/01/10--20:04: Fred Destin commented on 'CFOs in startups: you need to OWN the cash problem' (chan 1391823)

John; maybe I was overly forceful in making the point but I still think it stands. I have witnessed first hand and second hand instances where CEOs and founders derive ill-judged comfort from the fact that their reporting looks professional and worthy of a public company, whilst not fundamentally understanding the cash dynamics of their business. In French, an author once said "being competent is being wrong according to the rules". Whilst I am a passionate advocate of strong governance, I think good reporting relies on the right KPI's and the right metrics, not necessarily compliance with the relevant IAS standards, at least in the early stages.




11/22/11--17:40: certified financial planner commented on 'CFOs in startups: you need to OWN the cash problem' (chan 1391823)

Transparency is a key issue in an organization. They need to be aware of what comes in and what goes out from the company's funds.




12/15/11--08:21: vitiligo commented on 'CFOs in startups: you need to OWN the cash problem' (chan 1391823)

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