What Makes a Great Startup CFO?

Strong CFOs can be an opinionated bunch. And the Downing Ventures portfolio CFOs did not disappoint at a recent dinner at our offices, where we had the privilege of hosting a lively discussion led by Simon Smith, with food and drinks to kindle a debate on what it means to be a strong startup CFO.

With perspectives from Series A to B companies across consumer, enterprise, and health tech, we surfaced a diverse range of views on the CFO role. In this post I highlight 6 out of the many other qualities that persisted in our discussion, but it would be great to read other views in the comments section at the end of this post.

So what makes a great startup CFO? Here are some brief thoughts on the topic:

1. They are independent thinkers and influencers.

Effective CFOs cultivate independent thinking and act on it by influencing key decisions. In fact, they become a credible sounding board for the CEO and board only if they can maintain a degree of independence in their analytical thinking, all the while having the ability to meaningfully influence and impact the direction of a startup.

2. They are optimistic about everything except runway.

Finance teams need prudence baked into their DNA. But too much prudence can be a downer on the ambitious optimism startups need to thrive. How do effective CFOs balance pragmatism and optimism? As one of our portfolio CFOs put it, “you can be optimistic about everything except runway!”

3. They treat “finance function debt” as seriously as CTOs ”treat technical debt”.

Tech teams are used to unwinding “technical debt”, which sometimes requires “open heart surgery” on old code bases to scale (see Instagram example here). But what happens when a finance function breaks? Great CFOs foresee finance scaling issues (e.g. poor working capital management) and act quickly to unwind financial matters that could kill a company.

4. They automate workflows to keep finance teams lean.

In the old days finance teams would balloon as a business scaled. Today, thanks to cloud accounting platforms such as Xero (and its extensive app marketplace), having 2 to 4 smart people in the finance function can be enough to scale to millions in sales. Effective CFOs therefore don't rush to hire when they can automate first.

5. They build product knowledge beyond the numbers.

Great CFOs don't just get the numbers, they get the product, users, and market. And though they might not need as much depth in other areas of a startup, they need just enough to intelligently assess the impact of financial decisions across a company. In sum, a strong CFO shouldn't just be an accountant. They have to be a credible business leader.

6. They are expert communicators.

Some of the best CFOs we've met are just as brilliant as CEOs at reducing complex ideas into narratives that explain strategy compellingly to employees, customers, and investors. So a good CFO doesn't just share static numbers. They walk you through evidence-based narratives on how things have come to be and how they could be in the future.

There's clearly more to this topic than a blog post allows so if you're in the startup ecosystem with views on the topic, do share your thoughts in the comments below!

Much thanks to Laoise, Mike, and Sophie for reading the early drafts of the blog.