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Financial Tips and Advice from Boston Tech CFOs

It's no secret that raising funding for your startup is difficult. Then, once you accomplish this goal and the money has been raised, a whole new set of challenges lie ahead. How do you go about managing this capital, so that it maximizes the goal of growing a business. In addition to managing your spend and burn rate, at what point should you hire someone to lead your financial operations?

We asked several of the top CFOs in the Boston tech scene for their point of view on these two very important topics:

  • What advice would you give to founders in terms of managing a company's capital and finances?
  • When should a company add a CFO to the team?

Take a look at the answers below for lots of great advice.


Jim Kelliher Drift CFO

Jim Kelliher, CFO at Drift

What advice would you give to founders in terms of managing a company's capital and finances?

The best advice is really simple advice: Spend it wisely and do not let the spend or your business expansion plans get too far ahead of where the actual business or revenue is.

The situations which I have been involved in that were the most successful are when the founders were frugal. Not silly or cheap, but frugal which means they spent the money wisely. They never took the “next round” as a given, and more importantly proved out the business model in a “focused” environment before expanding beyond our core. That focus could be a market, a geography or a product line. We proved the model worked. We refined it where necessary, and then took it wider. We did not try to be all things to all people or in all markets, geographies etc. before first proving we had the business model refined and working. This approach reduces the need for huge amounts of capital, and while it might create a longer, slower path to success, it creates one that has a higher chance of success.

When should a company add a CFO to the team?

Some would say the earlier the better. While I support this advice, you don’t need to be too early. It is important that a CFO is involved early enough to make a difference in setting up the necessary processes and systems in order to scale and influence business decisions as the business starts to scale. But the business needs to be ready to scale. Putting things in place before you have proven anything can be wasted time and effort.

Usually this “right time” is after the company has produced and started to sell a product. Typically, this is around a Series B round. Being involved that early allows a CFO to be early enough to put things in place from the beginning that will allow a company to more effectively scale as it grows. It is always tougher to change or unwind things once they have been established rather than establishing them right in the first place. Ben Franklin had a saying that is pretty applicable to growing environments: “The habits of the Boy, become the Man.”  

Establishing good habits from the beginning can go along to helping a company be successful in the long term just like good habits early in life help set up a person be the best they can later in their life.


Joe Grabmeier Drizly CFO

Joe Grabmeier, CFO at Drizly

What advice would you give to founders in terms of managing a company's capital and finances

Planning and forecasting are key. Establish your business goals and put a plan in place to reach those goals. The plan must contain an up-to-date financial forecast including a cash flow statement so you always know where you stand vs. the capital you have. Understanding your runway is critical to how you manage your business and informs you of the need for additional funding. An evergreen forecast built off of your current state will help you model out the impact of varying scenarios on your runway and financials. Whether or not you should invest in a project can be quantified by its effect on your financials and resulting valuation.

When should a company add a CFO to the team?

Since every company and every CFO is different, the answer to this question is a definite “it depends”. Matching the right individual with the right role is good advice for any position and it certainly applies here.

A CFO who is also more of an operator can be brought in earlier and a company on steep growth curve or with a need for substantial capital could also benefit from hiring a CFO earlier. It also depends on the skill set of the founders – a team with strong financial chops can defer the need. It makes sense not to pay a CFO salary if you feel you can continue to build value while not going off the rails, but as soon as you get the sense that there is some leakage of control…it is time. In any case, having a trustworthy steward of the finance and admin role is a must from day one. This can be lower level or outsourced but something you do not want to get away from you. 


Bob Cruickshank ezCater

Bob Cruickshank, Co-CFO and Chief Administrative Officer at ezCater

What advice would you give to founders in terms of managing a company's capital and finances

My advice differs depending on the stage of the business. For an early-stage venture, you should always have a plan that gets you to the next fundraising; what does the company need to look like to maximize its value, and what will it take to get there? And avoid fixed expenses to maintain flexibility!

When should a company add a CFO to the team?

There’s no quick and easy equation for this. It’s a matter of balancing the stage of the business and the skillsets of the founders. As a business grows in complexity, the founders are increasingly pulled in a hundred directions and may no longer have a view of what the next 6-12 months might look like. At that point, they probably need a CFO.


Ed Durkin, CFO at Actifio

What advice would you give to founders in terms of managing a company's capital and finances? 

Be cash and capital efficient. Spend as if you are the sole shareholder and you are self-funding.

When should a company add a CFO to the team?

After you pass the stage of product risk, achieve annual revenues of at least $10 million with a steady rate of at least 25% year-over-year growth. 


Larry Whitman

Larry Whitman, Vice President and CFO at AppNeta

What advice would you give to founders in terms of managing a company's capital and finances?  

Beyond the obvious “don’t spend money on things you don’t really need,” I think there are two key pieces of advice I’d give to founders.

The first is about hiring. When it comes to people, I really think you get what you pay for. It’s certainly tempting to hire all cheaper, more junior people early on. But if you’re rapidly growing, it’s worth spending a little more to make sure your workforce isn’t underpowered. Getting heavier hitters can mean higher productivity and avoiding common mistakes, ultimately helping to fast-track the company’s success.

And the second is about tools. I’ve found many companies tend to skimp on the ERP system. A lot of founders use Quickbooks early on, but once you have real revenue (and certainly if you have physical inventory), you’ll quickly outgrow that. A good ERP system is something you really don’t want to skimp on, otherwise, you’ll find things get out of control quickly. In addition, having a good Excel model to drive your budgeting and forecasting, as well as a planning tool like Adaptive Planning, will be essential for looking ahead.

When should a company add a CFO to the team?

You really need a CFO once the business gets to the point where looking ahead is just as important as looking behind. A good Controller can help you manage the finances day-to-day and can ensure you understand what’s already been spent. But when it comes to driving projections about the future of the business and acting as a strategic sounding board for the CEO and the other senior members of the team, you’ll really want a CFO. I also highly recommend checking out this article which has some other great suggestions for how to think about the right timing for hiring a CFO.


Bart Ronan TRUX CFO

Bart Ronan, CFO at TRUX

What advice would you give to founders in terms of managing a company's capital and finances?  

It always depends on where you are relative to your competitors in the market and how fast you’re trying to grow. If you’re early to a market that’s starting to heat up being first matters and aggressive marketing helps you stake out a position. If the marketing is still developing or a bit more uncertain it’s usually prudent to control burn and experiment until you get the business model nailed down. Software and engineering talent is almost always a good investment, having a great product makes selling it a lot easier.

When should a company add a CFO to the team?

I usually say earlier is better, usually after a first significant financing round. I view the CFO as an important role in setting up the right systems, processes, and priorities to get ready to scale a business. It’s also helpful because more technical co-founders or younger entrepreneurs aren’t often as comfortable on the financial side or have gone through the process of raising multiple rounds of financing.


Bryce Chicone CFO Tips

Bryce Chicoyne, CFO & Global Operations Lead at SmartBear

What advice would you give to founders in terms of managing a company's capital and finances?  

My advice to founders who are fortunate enough to get funding should really understand and prioritize how much and where they are spending the funds. Use key metrics or KPIs which should be both financial and non-financial to track and monitor business performance. Plan for the unknown and maintain strong financial discipline even when a company’s performance is strong.

When should a company add a CFO to the team?

When forming a startup, first build your finance organization around a strong financial controller and supplement this hire with a consulting or part-time CFO to help with financing and strategic planning. Hire a full-time CFO when the business begins to gain scale, which can be a relative number and not necessarily revenue based; it could be based on the number of employees, total spend, high revenue growth rates, or capital raised.


Paul Fitzgerald

Paul Fitzgerald, CFO at InsightSquared

What advice would you give to founders in terms of managing a company's capital and finances?  

- Cash flow: Visibility into cash flow is critical to managing the business. This includes seasonality of collections, taxes, and other large outflows. In addition, it is important to be able to perform sensitivity analyses to understand what may happen the if company performs or under performs. You don't want to be surprised by the need for more capital as this may force you to make business decisions that are not in the long-term interests of the company, or require you to agree to onerous terms with investors and/or debt providers.

- Data integrity: Make sure there is integrity in the data coming from your key systems (including ERP, CRM, and HRIS). This is core to building sound financial models, understanding performance by segments, and measuring KPI's. This will ultimately allow for more informed business decisions.

- Equity: Define the philosophy related to granting equity (leverage your Board members for guidance). Equity is a limited resource so clarity in new hire and refresh approach is critical.

- Board composition: As a founder, you will typically have investors on the Board. You should also have a couple of independent directors that are committed and engaged, ideally with different areas of expertise (e.g., go-to-market, product/technology, industry).  

When should a company add a CFO to the team?

There are a number of factors that go into this decision:

- Complexity of financial model: Is the company finding that it cannot adequately predict its financial state (revenue, cost structure, cash flow, etc.)?

- Importance of capturing KPI's: How important is it to identify and measure KPI's in order to make informed decisions?

- Efficiency of operating model: Is the order-to-cash process scalable? What is the customer experience (both internal and external)?

- Growth plans: Is the company looking to get into new markets (e.g., international)? New channel partnerships? New verticals? Move engineers or other parts of the business offshore? Is scenario planning valuable in the decision-making process?

- Experience of executive team: Is the team more weighted towards first-time execs who may require additional support?

- Needs of investors and debt providers: How demanding are the investors and debt providers regarding reporting? With regard to debt providers, are there financial covenants that need to be negotiated, monitored, and managed?


Colin Barry is the Content Manager for VentureFizz. Follow him on Twitter @ColinKrash.