Over the past few years, the role of a CFO has witnessed a sea of change. The needs of the modern business and leadership teams today are nothing like last...
Today, the role of the CFO has gone from being a signing authority to one that is more strategic and prescriptive, and with that comes the need for CFOs and finance leaders to equip themselves for what’s to come, especially when there is no precedent.
In our last event in New York, Spendflo, along with Paddle, hosted industry veteran Kiran Hebbar, CFO, Alloy, and Siddharth Sridharan, co-founder & CEO, Spendflo, where they discussed Kiran’s unconventional path to becoming a CFO.
During the conversation, they uncovered everything from what it takes to become a successful CFO and build an A-team to the current market scenario and what finance leaders need to keep in mind before raising their next round.
A successful CFO today needs a broad range of skills beyond knowing the ABCs of finance and accounting.
“You need somebody with people skills,” says Kiran, “someone who can tell the truth.”
In the face of uncertainty, especially considering the present market situation, it is of utmost importance for leaders and CFOs to possess the skills to communicate bad news and harsh reality effectively.
What’s more, to gain a clear understanding of the organization, CFOs need to be able to forge strong relationships across the board, “especially with department heads across the organization,” says Kiran. As more functions start to report to CFOs, they have more oversight of tasks that traditionally hadn’t been part of their mandate. In order to build logical connections across various initiatives and determine their viability, CFOs will need to gain the trust and work more closely alongside department heads to yield critical insights.
And finally, CFOs need to be able to synthesize data insights and communicate what they mean in concise and compelling ways. “They need to know all the data,” he notes.
“You need to be able to manage the board,” says Kiran, “and to do that, you must have complete mastery of detail.” CFOs today are entrusted with determining what certain implementations and changes will entail for the business and their impact on the teams.
They need to consolidate and gain real-time data visibility across the board, especially with growing costs such as technological and software spends. This will enable tighter controls, reduced risks, and more accurate decision-making.
That’s not all. Clarity on the vision and honesty about the state of affairs are also integral. Even more so when it comes to dealing with the CEO. “The partnership between the CEO and the CFO is important,” says Kiran. They need to be able to discuss the truth and the ugly problems to solve them.
Finally, it’s not enough to simply have access to all this data. CFOs need to be able to draw meaningful inferences from them and weave compelling stories around them. “You need to tell the story as a marketer would do,” notes Kiran.
A 5-star CFO goes above and beyond to create value for the business and leave behind a legacy. So, how can CFOs aspire to become all-stars? Kiran has a few tips.
“Work with engineering,” he recommends. As companies grow and scale, so do their cloud bills until organizations just can’t afford them anymore. A 5-star CFO is not only strategic in their decision-making but also gets involved quite deeply technically. They partner with CTOs to help drive strategic decisions, apply a cost-benefit analysis to prioritize the different digital investments, and optimize both technical operations and financial results.
“They also need to be problem solvers,” he notes. Today, the modern CFO influences almost every function across the organization. As their roles grow to cover a gamut of areas, including crisis management, technology evaluation, customer experience management, attrition control, and business continuity management, therefore, it is essential for them to be willing to dive into the details and problem-solve.
“When hiring a VP of finance, look for small company people who are willing to roll up their sleeves,” advises Kiran. As the role and responsibilities of the modern CFO expand, it’s important to get the right people in the right seats and build an all-star support team. And that starts with hiring the right VP.
“You want someone who can bring order to any situation,” says Kiran. Whether it’s through using the right tools or automation or setting up systems and processes, an A-grade VP would not be afraid to get technical and be willing to do what it takes to get the job done.
There’s no doubt we’re navigating through turbulent times in the current economy. And fundraising in the current climate is no easy feat. “The market has changed metrics on you,” exclaims Kiran. “It isn’t valuing growth anymore. We’re looking at a valuation problem.”
SaaS multiples are down 75% from a year ago. Unicorns are no longer unicorns, and startups are now worth half of what they were in the past year. All this makes it very difficult for founding teams to raise funds, especially in late-stage valuations.
While these are still good times for SaaS growth, revenue multiples have never looked worse. According to Jason Lemkin, founder of SaaStr, “no one wants to go public at $200m ARR and only be worth $1B. Especially if the last round was at $2B. Multiples will go up and down over your 7-10+ year journey. But you need to know where they are at any given time.”
When it comes to raising funds from Venture Capital firms, Kiran has some advice to offer.
“The truth is this: raise from anyone who will cut you a cheque,” he says. “However, if you’re looking to raise from more than a single source or VC, you want to have a good understanding of whether or not that VC can be a problem solver.”
The right investors will get you more than money out of the deal. They’ll loop you into the right networks, offer advice on how to grow and scale the company and share expertise in your field. Each of these is an asset that leaders can leverage for the growth of the company.
“Another thing you want to look out for is emotional intelligence,” says Kiran. As a startup navigates uncertainty and the typical challenges that come with scaling a young company, it’s important to have someone on your side who understands.
As part of the Journey to CFO series, we’re doing our bit to bring the finance community together and create a space for leaders to share playbooks, their expert perspectives, and the strategies they’re betting on to get ahead of the curve. To learn more about our curated events and webinars for modern CFOs, click here.
Kiran Hebbar is the CFO of Alloy - a leading identity decisioning platform for banks and fintech companies. Kiran has a proven track record of scaling high-growth software companies as CFO/COO, combined with a decade of venture investing experience as a general partner at venture capital firm Valhalla Partners where he invested in B2B SaaS companies.
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