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What is the role of a CFO?
The Chief Financial Officer is the manager of all finance decisions within the company, they report directly to the CEO and the synergy between the two is extremely important for the longevity of a company.
Any firm that is scaling needs an experienced financial executive to fine tune the business strategy to within budget constraints and efficiently allocate capital to stimulate further growth. A CFO is also expected to use historical data to make decisions about where and how to invest in growth and ensure that the company has optionality going forward. They also need to be excellent communicators to transparently convey the company’s vision to investors to raise fresh capital through IPO’s, private rounds or other sources.
What qualifications are required to be a CFO?
Usually, a Bachelor’s degree in finance, accounting or similar is required, though many CFO’s also have MBA’s or Masters in finance or accounting. However, CFOs can come from a multitude of different sectors and backgrounds. Certifications such as a CPA or CFA would also be a plus.
The CFO will be an individual who has extensive experience in leadership (especially leading finance teams) and has a proven track record of maximising a company’s growth. In-depth industry knowledge and technological proficiency in the systems utilised (ie accounting software), as well as a track record of helping a company raise funding/exit, is also preferred.
What are the responsibilities of a CFO?
The CFO would be responsible for the following:
1. Financial planning and analysis (FP&A): Managing the budgeting and planning processes, building models for projections, tracking performance and looking for opportunities to increase performance.
2. Control: Ensuring the company has accurate financial metrics (revenue, expenses, cashflow). Since 2022, due to turbulence in the market, the CFO is today one of the most important decision makers in a company, and one of their main priorities will be staying lean/profitable, or getting to profitability as soon as possible.
3. Tax: Intimately understand the company’s tax requirements, making sure the company is compliant in any domains it operates in, and optimising tax obligations within the bounds of compliance.
4. Risk Management: Assess potential risks facing the company and try to mitigate them, as well as managing internal audits as the company grows.
5. Capital Markets: Aquire capital for the company survive and/or thrive, optimise the relationship of capital between equity and debt where relevant and manage the investor base.
When to hire a CFO?
Having the right finance leader in place is critical to scaling successfully. While your company can benefit from a CFO in the early stages, the maturity and size of your company, as well as your time to IPO, will shape how the market perceives your company and who you can successfully get on board.
For most early stage businesses, one of the founders will take on the responsibilities of a CFO, though in rare cases (more often in the FinTech or financial services industries), early stage businesses may still hire a CFO.
However, CFOs are usually hired in later stages (typically after Series C/D) and work within existing large teams and mature systems rather than building out core infrastructure. Generally, a company should be well on their way to maturity before hiring an experienced CFO.
According to Bessemer’s CFO Community, 68% of respondent’s found that the best time to hire a CFO is when you reach between $5-25m ARR, with only 8% stating an early stage startup (below $1m ARR), should look to hire a CFO:
What Salary and Benefits should I offer a CFO?
As with most positions, this is entirely dependent on the size and stage of your business.
In terms of benefits, most companies have a bonus scheme in place, which is can be directly linked to the company’s performance. Therefore, the exact amount can vary, but is typically between 10-25% of the candidate’s base salary.
In terms of base salary, the table below gives an indication of CFO salaries depending on the stage of the company’s growth (this is an average and results may vary):
| Growth Stage | Basic Salary |
|---|---|
| Seed | £80 – £100k |
| Series A | £100 – £120k |
| Series B | £140 – £180k |
| Series C | £150 – £200k |
| Series D | £200k + |
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