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A Founder's Guide to the Growth-Focused CFO Role

Differences between a CFO role pre and post-Series A

Just like other c-suite roles crucial in accelerating a tech business, the CFO role has evolved over the past few years to take on more responsibilities, as the diverse challenges the market is presenting continue to stack up. In this rapidly changing landscape, it’s essential for founders to understand the significance of having a growth-focused CFO by their side.

Think & Grow Partner, Dan Spencer, delves into the valuable contributions a growth-focused CFO can make to your business and the differences to note from a more traditional CFO, particularly when you are scaling beyond Series A and transitioning from practical financial matters to strategic decision-making and commercialisation. 

What does a typical finance leader at Series A look like? 

One of the most important things a founder should do before scaling is have the ‘house in order’ in terms of the finance function. Whereas, we see a lot of early-stage founders tell us they’re ‘highly commercial’ and can manage the P&L themselves. This is often registered as a red flag for investors and board members these days, particularly as they prepare for their next funding round. 

Having a clear view of the numbers and how the business is tracking financially has become even more essential as the market has shifted to favour better unit economics and optional breakeven mandates from investors. You need to be all over your financial metrics on a weekly basis, founders often don’t have the time, headspace or confidence to achieve this.

Before you raise Series A, you need to have some of the basic financial management in place. Getting good quality help at this phase is critical and this can be done by hiring a Head of Finance or a Finance Director or engaging a high quality and experienced fractional CFO for a few days a week to help set up the right system and budgeting process.

 

The typical background of this type of finance leader has generally started in a big 4 accounting firm and may have transitioned to an industry role. They are usually classically-trained, CPA chartered accountants and experienced in ensuring every ‘backstage’ aspect (opps) is in good shape and the budget reflects the strategic direction of the business. This finance leader will also be essential when raising your next round of capital.

Why founders should look towards a growth-focused CFO at Series B

  • To shape the financial strategy for growth  

Once the business scales beyond the initial start-up phase, the financial landscape becomes increasingly complex, requiring differing skills, experience and a unique perspective.

Post-Series A is when the founder/co-founders will need a highly strategic and commercially-driven CFO. I call these ‘Front Stage’ capabilities. 

The core responsibility of CFOs is to ensure that the business is on trajectory to hit its long-range goals, whether the business is preparing to scale or is in the process of scaling, a growth-focused CFO will play a significant role in the overarching strategy; ensuring that a commercial filter is layered over the top of any critical or big long-term bets the business is going to make. This could be launching into new markets or products, M&A, partnerships or potential JVs that will help accelerate the business's growth. 

  • Drive operational efficiency, while mitigating risks

Undoubtedly, a growth-focused CFO prioritises finding opportunities to say ‘yes’ rather than ‘no’ and is a critical operating partner to the Founder/CEO. While a big part of their role is to drive business performance and efficiencies, exceptional CFOs also understand the capacity of the business to deploy capital and ensure that investments align with business goals.

However, with exponential growth and new hires, there can be rushed actions and quick decision-making. To this point, long-range planning is essential to sequence core strategic bets and evaluate key business drivers and risks under different scenarios. This is especially critical if you are scaling overseas, there may be financial regulations that need to be considered like tax matters, reporting standards and even industry-specific regulations. The CFO must identify possible tail risks that could inflict material financial damage on the business. 

A growth-focused CFO should be proactive in mitigating risks, streamlining processes and optimising financial workflows so that you don’t need to concern yourself with any of it amongst the existing needs of the business and what needs to be done. 

  • To raise the company’s profile and reputation for future funding 

A CFO at this stage will be looking to raise the company's profile and reputation within the global investor community to optimise capital structure and fundraising opportunities. 

Funding conditions have become more challenging in recent times for companies at all stages. A great CFO will be building relationships with target investors ahead of any fundraise; ensuring they have a strong understanding of the business and how to value it, with ongoing updates to build trust and take them on the journey. 

This is to ensure that when the time comes for the next round, you will be able to identify the most appropriate funding sources/partnerships who are already well aware of the business and its potential. 

For example, if the business is planning to scale into the US from Australia, it’s recommended to consider looking at capital partners in the US as well in order to tap into new ecosystems. The CFO will actively manage these relationships and keep them updated along the way.

The typical background of a growth-focused CFO

This type of CFO profile still comes from a traditional background, but they have often been part of a growth journey, and taken a business to an exit or IPO. There are many great CFOs who have done this. The other profile, and one we are seeing more of, is a non-traditional CFO that comes with a transactional background, often they started in investment banking or PE, and understand the capital markets and what it takes to maximize an event. 

Regardless of whether a growth-focused CFO comes with a more traditional background or transactional background, there are critical skills/experience you should consider that any growth-focused CFO needs to demonstrate:

  • Highly strategic and commercial
  • Transactional experience (M&L, exits)
  • Understands the in and outs of the capital markets
  • Impeccable communication skills internally and externally to stakeholders 
  • Thrives in a fast-paced environment
  • Can lead and inspire a high-performing finance team 

What type of CFO does your business need? 

If you want to find out more about how we can help you hire a CFO or any leadership role, contact us here!


ARTICLE by Dan Spencer, Partner, 5 March 2024

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