The evolving role of a CFO in a high-growth startup

An Interview with Jacqueline Purcell, CFO of Deputy, who shares her career advice for aspiring CFOs and tips for founders raising capital.
Dan Spencer
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August 12, 2021

The evolving role of a CFO in a high-growth startup: An interview with Jacqueline Purcell 

Jacqueline Purcell is not your ordinary CFO. With a background in law, tech and investment banking, a C-suite finance employee doesn’t seem like the traditional route to take. Jacqueline has instead redefined the role of the CFO to encompass more high-stake decision-making and be a powerful voice and role-model who handles explosive startup growth. All without a CPA or accounting degree. 

It was a no-brainer to pick her brains about her experience as a CFO, insights on how high-growth startups can hire a CFO who will make an impact and the value that role can bring when it comes to raising capital. 

Dan: How would you describe yourself as a commercial leader and what is important for you in a role?

Jacqueline: I would describe myself as a strategic/operational CFO, with a non traditional background. I don't have an accounting degree. I'm not a CPA, for example. I thrive in a fast paced environment where I have a 360 degree view across the whole company and a good sense of what's going on everywhere. Outside of the CEO, there aren’t too many other roles in organisations which require you to be across the business and have the opportunity to work with your peers, who might be running product, engineering, sales or marketing, on a daily basis. 

Dan: What’s it like working as a CFO in a high growth startup?

Jacqueline: They’re really fun and challenging places, particularly for new CFOs. You can accelerate your growth path and be doing things that might take you years to do in a more traditional business, because everything just moves so quickly. You're empowered to make decisions much more earlier than you would be, again, in a traditional context. 

It’s definitely a learning experience too. Startups are great places to make mistakes as you can generally correct them quite quickly. So, if you’re looking to get that experience of being the decision maker in a really dynamic context there's no better place to get that growth. When things go well, it's awesome to celebrate with the company. You create more stories and more moments.

From decisions about fundraising, capital allocation or technical matters, to hiring and firing – you not only get to make those calls that impact all of the employee base, but also have responsibility for communicating those decisions too. It can be a well-rounded experience. 

In my early days at Deputy, which coincided with the early days of the pandemic, I was making decisions on to what extent we needed to restructure the company -- one way door type decisions. I was able to do that because I felt confident in my ability to tell a clear story through numbers. I didn’t know what was going to happen in the pandemic, but I knew how to build models with different scenarios. I was able to present a few different versions of what the world might look like to our Board and discuss what we should do and why. You’ve got to be able to see the big picture and not get down too much in the weeds. 

Dan: How has the CFO role evolved in this current environment and what are the key skills that are essential for a CFO today?

Jacqueline: The pandemic has thrown a big spanner in the works into how we operate.  The external context is changing rapidly alongside the internal context.  As such, we’re constantly revisiting profitability, efficiencies, assessing our growth and making decisions on imperfect information sets. It's really important for CFOs to feel comfortable in making sensible decisions with imperfect information and/or in uncertain environments to be able to move the business forward.  You should not be afraid to be agile. You’re going to be constantly receiving new information and need to leverage this to know when to pivot or change course.

Thankfully, it’s easier to do this in a fast growth environment as opposed to some of the bigger, legacy businesses – for example, I took my current role back in March last year when covid cases were exploding, and there was so much ambiguity.  I had lots of meetings with the board and employees, and I only had a basic understanding of the business model at that point so as you can imagine it was a tense period but we got through it. I think my background in investment banking really helped me remain calm, take a methodical approach to the situation, while also moving at pace. In this new world we live in, it's important nowadays that leaders remain calm and composed in very stressful situations. What made it easier was working with employees and great founders who are passionate and really believe in the mission of the company. 

Dan: In reference to the relationship between founder/CEO and CFO -- what’s needed from each one to maintain a successful partnership? 

Jacqueline: There’s definitely a high correlation between the quality of relationship between the founder and CFO and business success.

It requires a high degree of trust and being comfortable enough to tell those uncomfortable truths. You have to make sure that everyone is clear on the reality of what's going on. If the founders know you are in their camp, it makes it much easier to have the harder conversations as they know your interests are aligned with theirs and the business. So, having someone in a CFO role who can be honest and you trust is critical.

Jacqueline’s 3 essentials for hiring your first CFO:

  • Type of CFO: Be really clear on what kind of CFO you're looking for, whether that is someone with strong technical, operational or strategic skills. If someone is super technical, they might be narrow in their lateral thinking, but go deep in finance. In contrast, the more operational type can bring a 360 degree view of an organisation whilst being able to tell a clear enough story on the reality of the business through numbers that help with decision making. Both require a different set of skills.
  • Environment fit: Be clear on what you're trying to achieve and keep a high-growth environment in mind. When I've seen people not work out, it's often because they haven't been able to be effective in that type of environment or situation. 
  • Qualities and skills: The right domain knowledge is the ‘tick the box’ aspect, but I'd be really focusing on whether someone's got really good leadership qualities. Can they influence the executive team? Communicate and connect with your employees, customer base and your investors?  

Dan: What advice do you have for a first-time CFO moving into tech?

Jacqueline: I’d say the first priority would be to just get in there and understand the business model inside out. One of the earliest things I did was build a proper operating model with two purposes: One, to actually help me really understand the business and what the key drivers were, both from a revenue and cost perspective. Two, it was a good way of demonstrating value really quickly. I see from various companies that I chat to, they have different levels of quality in their operating plans, and oftentimes a little bit disconnected from reality.

Second priority would be to spend a lot of time building relationships across the business and understanding what people's pain points are and what they need. Even though CFOs are accountable for the numbers, it’s a people-centric role and they need to invest time there. 

Third, high-growth tech businesses can be unstructured and chaotic. As you get your feet under the desk, review opportunities to take out the operational friction and think about how you can build in the right structure. Remove the complexity where you can, and you’ll quickly help the business accelerate and enable the growth.

Lastly, as mentioned before, we’re living in a world which requires us to rethink and pivot often.  I think it’s really important for CFOs to be able to leverage what information they can, but also be comfortable with making sensible decisions to move the business forward quickly. For a CFO it's incredibly important to keep a calm and methodical approach, while making the right decisions quickly. I think that’s one of the things I transferred from investment banking - learning how to remain composed in stressful situations. I do enjoy a crisis is what I have learnt!

Dan: There's a lot of capital flowing around at the moment in the tech ecosystem. What are you seeing?

It's a founder's market. We’re getting calls all the time from investors and it's interesting chatting to them - we can sense they would rather be sitting on our side of the fence because they are finding it competitive to invest in businesses. So if you have the right metrics, I think you can now raise money at valuations that have never been higher. 

Companies in Australia usually have a tendency to go public earlier because they haven’t found it easy to raise capital in the private markets, but in the last couple of months we’ve seen a ton of big private rounds in Australia and I think we will start to see companies here staying private for longer. 

Dan: Do you have any advice for a founder who’s thinking about raising capital?

Jacqueline: If you're in the VC space, your investors will really want to get behind an exciting vision and story. So, for the founders, you’ve got to nail that and be able to speak really credibly about not only what you’re doing now, but how you will grow and evolve your business. 

As a CFO, it’s important to articulate the operating model and tell the story of the business in as simple terms as possible. Don’t over cook it with too much detailed financial data.  In the past, I have provided a single Excel spreadsheet that's less than 200 lines long so the investors could see the business from top to bottom and we could answer any questions they had. Investors could also look at the spreadsheet to make a really quick decision about whether this is a business that they’re interested in.

Key takeaways: 

As a founder/CEO: 

  • Find a strategic CFO that you foresee as becoming a trusted partner. 
  • Your CFO must have strong leadership qualities and communication skills, but over and above this, they must have the following: ability to deal with ambiguity, can move at pace and growth mindset. 
  • For successful investment, nail your brand story and vision, but also tell that story through numbers. 

As a current or aspiring CFO: 

  • Understand the business model better than anyone else. Take an active interest in all aspects of the business to have a clear view of the revenue and cost levers . Build relationships with team members and get to know their pain points quickly. This will give you a ‘big picture’ view of the business and empower you to make the right decisions. 
  • Tech startups offer an experimental environment -- don’t be afraid to make mistakes. Just be prepared to constantly form solutions. 
  • Build a bond with your founder/CEO to feel comfortable having the tough conversations in order to forge successful growth. 

If you’re on the hunt for CFO for your business or you’re an aspiring CFO looking for a role in a high-growth tech business, we’d love to hear from you. 


Dan Spencer

Partner
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