Role of Financial Heads in Silicon Valley Start-ups
Silicon Valley start-ups would need a finance controller perhaps more than any other start-up because the team will be more concerned with innovation at the expense of finances. No new business can succeed with an inexistent or inefficient financial system. The CFO is there to see that the finance side of things is taken care of.
Start-ups usually start off with an idea and little money. They need money to translate the idea into a product or service. The CFO’s role is in helping the start-up get funding by talking to venture capitalists, debt financiers and other potential sources of funding.
For better business growth, the start-up may be forced to go back and raise more capital. The CFO can write a sensible financial plan that shows the business’ performance and needs for funding that investors will find attractive.
A CFO can increase chances of refinancing if the start-up exceeds investor expectations in cash management and delivers accurate reports on spent funds. If the start-up shows growth instead of loss, chances for refinancing are higher.
A CFO is able to look at the start-up business plan and weed out shaky financial plans and projections. He/she brings better financial ideas to the table that can see the start-up price products better and get more returns on investment.
Control and optimize cash management
There are many needs for a start-up; equipment, staffing, offices and so on. Prioritization of cash needs and optimizing use of available cash is needed to stretch the little available. The CFO can monitor cash flows and put in place controls for cash management.
Tech start-ups will have little management experience and a lot of competing idea of what should happen. A CFO will usually be experienced in financial and administrative functions. Basic stuff needed for efficient operations like banking, insurance, taxes, and staff remuneration have to be worked out. The CFO is able to do this and have the tech team concentrate on their work.
Get better price for an M&A
M&A buyers are looking for start-ups that have sound financial, administrative and operational management practices. Any start-up without these attracting aspects is bound to be drastically discounted or avoided as the buyers know there will too much hassle in integration and fixing bad practices. A start-up with a CFO will attract better prices as buyers know that these good practices are in place. The CFO can also be called upon to ensure smoother integration and translation.
Here are the CFOs who are controlling the finances of the startups of America: