The CFO plays a pivotal role in successful migration of a private company to a professionally managed PE environment. Working with a PE can be difficult for first time entrepreneurs. Here the CFO plays a key role as the main conduit of information flow between the company and its PE investors. PE investees tend to have dynamic business models, are high on uncertainty, work in fast paced ecosystems, and entrepreneurs need smart CFOs to help them navigate this environment.
Life Of A Start Up, After PE Investment - CFO For Startups And SMEs
1. MyCFO http://mycfo.in
Life Of A Start Up, After PE
Investment - CFO For Startups
And SMEs
How A CFO Can Help?
The CFO plays a pivotal role in successful migration of a
private company to a professionally managed PE
environment. Working with a PE can be difficult for first
2. MyCFO http://mycfo.in
time entrepreneurs. Here the CFO plays a key role as the
main conduit of information flow between the company
and its PE investors. PE investees tend to have dynamic
business models, are high on uncertainty, work in fast
paced ecosystems, and entrepreneurs need smart CFOs
to help them navigate this environment.
So, what should a start up entrepreneur expect
from his CFO?
A good CFO is very first focus should be to build a strong
management reporting structure and ensure
transparency in the flow of information. This would be a
consequence of accurate and timely closures, and
constant/rigorous watch of the business plan and
budgets. The CFO needs to co-pilot the business with the
CEO, drive the business agenda (not just the accounting
function) and own the numbers. He/She plays a key role
in challenging assumptions and identifying the
weaknesses/ risks in forecasts coming from the folks on
the business/ operations side of the business.
Apart from strong technical finance knowledge and
operational experience which are given in a good quality
CFO, a start up CFO needs to be very hands on, quick in
decision making and be mentally open to constantly
changing business realities. Monitoring of cash burn in
3. MyCFO http://mycfo.in
the business, on a month on month basis, ensuring that
the company gets best value for every rupee of
investment/ expense and keeping an eye on compliances
with covenants signed by the Promoters with PE investors
are focus areas for good start up CFOs.
In addition to functional finance skills, the CFO has a
leadership role to play, particularly in an invested
environment. The need to enhance and expand the
financial systems and processes to keep pace with the
scaling up of the business, requires the CFO to attract
and retain the right talent with the finance function while
effectively interfacing with other functional heads.
Lastly, to succeed in the PE environment, the CFO has to
be able to handle a high level of scrutiny and should be a
sophisticated communicator. The success mantra lies in
effectively managing the flow of meaningful business
metrics (not data!) between the company and the PE
investors. A credible CFO who has a transparent and
balanced view about the opportunities and challenges the
company is facing, what the management is doing about
them and the likelihood of success is a valued asset for
an entrepreneur in a start up environment.