How to turn your start-up into a unicorn

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How to turn your start-up into a unicorn

 

The days of the ‘typical accountant’ are long gone. Today a CFO is so much more than someone who controls the company’s finances. This is even more pertinent in the start-up space where it is essential for someone to be totally engrained in the detail whilst also taking a macro view on driving the business towards its strategic objectives.

As a result, the traditional CFO CV has changed dramatically. It is no longer enough to just be a technical reporting genius. Now you must have extensive commercial experience, be able to prove you have that entrepreneurial flair and show that you can build a finance function from scratch whilst facing off to investors – typically two very different skill-sets.

So what CVs are getting the top jobs in start-ups nowadays?

Generally, it’s Ex-Bankers, Ex-Strategy Consultants, or Accountants.

Founders will usually come to me for guidance on what background is most applicable and this is typically influenced by the short, medium, and long-term objectives for the business. To tease that out, we need to address the following:

  • What are the main pain points for the business?
  • How regularly do you need to fundraise?
  • What skill-set do you have across your board?
  • Are you hiring for now or hiring for the future?

The most common mistake that is made when hiring a CFO is approaching the search with short term goals, compromising the ‘future-proofing’ of the business. The most successful start-ups I have worked with are constantly addressing the scalability of the hires they are making. It is essential that anyone you hire will be able to cope with the pace of the company growth. Despite cash constraints facing most start-ups, I believe you’ve got to spend to save; the return on investment a business can gain from hiring a top tier CFO is exponential.

A data set I regularly reference with my clients is produced by Notion, a Venture Capital firm who specialise in SaaS businesses. They analysed the leadership hiring across 100 high-performing businesses, 50 of which attained unicorn status (valuation of $1 billion).

They found a correlation between leadership hiring and the success these unicorn businesses experienced as a result. The overriding trend was that businesses who were prepared to spend on finding the top-quality talent early on had a significantly higher growth rate than those that didn’t.

The Unicorn Trajectory – Notion, 2019

Notion found that an increased investment in leadership in the initial stages of a business lead to an increased valuation of the business in the years to come. Both groups raised between $3-$15 million of venture capital in round one, however unicorn companies later outperformed, receiving a valuation of $1 billion plus in comparison the $100 million valuation of those in the control group. This suggests that investing early on in CFO’s and other leaders directly impacts a business’ ability to project growth.

Recruiting the very best can take time, and it isn’t cheap, but the impact it can have on outsized growth, especially in the early years, is apparent; Notion have proven that. If you would like to have a conversation about how to not only find the best talent on the market, but the impact it can have on your business, get in touch with me via charlie.ruck@dartmouthpartners.com. For a copy of “The Unicorn Trajectory” you can either get in contact with Notion or myself, I’d be happy to share it with you. 

 

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