How do I find the right CFO for a startup?
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If you’re looking to hire a startup CFO, we’ve done the leg work for you and created a page where you can find the right one for your startup: Kruze Startup CFO Directory. We’ve worked with dozens of CFOs and these are the best :)
How to Hire a CFO for Your Startup
A startup CFO is a senior level hire, and there is no way to avoid this hire taking a lot of the CEO’s time. It’s too strategic of a hire for the founder/CEO to not be very, very involved. That’s just something to commit to, and in our opinion, hiring the best senior talent is part of the CEO’s job description.
So here is how to hire a CFO for your startup
We are going to skip right to the tactical part of how to find that CFO hire. Later we’ll get into the strategic stuff around what experience they should have and the reasons you’ll want to hire one.
Using your network: The best, but most time consuming, method of hiring a CFO is through your network. This is generally quite time consuming, since the founders need to outreach to their network, but it usually yields financial professionals who come with solid recommendations from people you trust.
Here’s how you can strategically use these networks:
- Venture Capitalists and Advisors: Your firm’s former VCs and advisors are a treasure trove of contacts and insights. They can recommend candidates who have a proven track record in startups and understand the intricacies of navigating venture capital and seed funding landscapes.
- Ask Other CFOs: Ask finance professionals in your network who you trust in your network if they know anyone who is looking for a new role. Don’t be afraid to ask professionals who are in different industries or verticals - they still may know good possible hires who are searching for a new position. And CFOs are pretty good networkers, believe it or not - they tend to have a lot of the same problems (from accounting questions to fund raising questions to … dealing with founder questions) so they network with each other quite well to share expertise!
- Industry Connections: Leverage your existing industry networks. You’ve probably met with scores of founders in adjacent startups - ask them for advice or recommendations. Attend industry-specific events, conferences, and workshops to meet potential candidates and gather referrals.
- Outsourced Financial Partners: Engage with your outsourced accounting partners, like Kruze Consulting. Firms like Kruze, which specialize in working with VC-backed startups, can provide valuable insights and recommendations. They interact with a wide range of financial professionals and can often connect you with potential CFO. candidates who have relevant experience in startups and fundraising.
- Startup Communities: Participate in startup forums, online communities, and local entrepreneurial events. These platforms can provide access to a network of professionals who have direct or indirect connections to potential candidates.
- Scour LinkedIn: You probably already have a paid LinkedIn recruiting plan, but if not, get one and search for VPs of finance, CFOs and other finance professionals who are one or two hops away from you. It’s not bad to ask connections to make introductions to people you see who are two connections away from you - this also gives you the advantage of getting that initial connection’s impression of the person.
There are ways to make this less manual. You can announce on LinkedIn that you are hiring a CFO. While this will get a lot of paid recruiters to outreach, it will also let your network do some of the work for you. For sure you should use investor updates and board meetings to announce your search. Finally, let the entire company know so that they can refer in qualified people that they’ve worked with in the past.
Another way to hire a CFO for your startup is to hire a professional recruiter. These recruiters typically take 20% to 33% of the new hire’s annualized salary, so they aren’t cheap. The advantages are that they can do a lot of the manual outreach work, they likely already have candidates that could be a good fit (assuming they specialize in this type of a hire), they are good at working funnels, they can manage the first round of interviews and coordinate scheduling, and they can act as a broker, helping you find a good way to merge the CFOs and startup’s needs.
What Does that Startup CFO Hire Do?
The first thing a senior finance professional does is take work off of the CEO’s plate. A good finance leader is a true partner to the founders, and should be able to answer a lot of questions that come in from sales people, department owners on their budgets/strategies, some investor questions, etc.
A startup CFO is also responsible for managing the financial reporting, financial projections, and financial operations of a startup. They ensure that the books are closed correctly every month, manage the finance team (internal or external), and deliver accurate financials. Additionally, a startup finance leader is involved in managing fundraising activities, including updating financial models and responding to investor diligence requests - although it should still be the founder/CEO doing the outreach and actually being the face of the company during a fundraise. They may also handle legal matters such as insurance, leases, and loan documents.
Many of these tasks can be done by a part-time CFO, instead of a full time hire. This saves the startup money, and since part-time CFOs are easier to find, can reduce the amount of effort to recruit. And, once it is time to upgrade to a full time professional, you can work with the fractional finance person to help find one.
Also, Here are the most pertinent qualifications and certifications to look for when hiring a startup CFO:
- Tenure: ideally, your CFO will have at least 10 years of industry experience. While this may be their first CFO role, they should absolutely have a background in Corporate Finance where they grew from Staff Accountant to Controller to VP of Finance to CFO. A big mistake we see our startups make all the time is hiring their Investment Banking buddy as their startup CFO. While they might be great at FP&A, they likely have little experience and no desire to do the day to day accounting or “scorekeeping” work. That means you need to hire a Controller and a few Staff Accountants as well, and just like that a $200K salary just multiplied to $500K. You’re better off putting your buddy in an operations role.
- “Big 4” Experience: the roots of CFO work are based in accounting, so you’ll absolutely want to have a CFO who has spent at least part of the career at the Big 4 (Deloitte, KPMG, EY, PwC). The structure, learning opportunities, and exposure to dozens of Fortune 500 company’s audit and tax procedures provide an unparalleled training ground for a budding CFO.
- CPA and/or MBA: an ideal CFO is someone who was once a CPA. The CPA exam is touted to be THE most difficult exam in the world to pass and while doctors and lawyers can debate this fact, I think we can all agree that someone who has passed the CPA exam is capable of high degrees of discipline and commitment. An MBA certification is also fantastic because it has vetted the candidate in the art of management, interpersonal relationships, and growing a team. Finally, a CFA certification is superb if you want to get into investment management, but it won’t help you much as a CFO (unless of course, you’re a FinTech CFO)
- Prior Fundraising, M&A, and IPO work: one of the most important jobs that the CFO will take on is shepherding the company through their Series A, B, C, D and hopefully through an exit. Even the best in-house CFOs see just a few of these events in their career, so it’s often best to bring on a CFO Consultant during these times. At Kruze, we assist with at least one M&A transaction per month and multiple fundraising events every month; our clients raised over 2 billion dollars in funding in the past year! If you’re looking for a Startup CFO, we’ve vetted a few top-notch startup CFO right here. And we have lists of the top outsourced CFO services here and fractional CFOs as well.
Feel free to reach out to me if you’d like to work together:vanessa@kruzeconsulting.com
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