20 Ways CFOs Can Improve Performance for GOEVs & VCs and Have a More Rewarding Fit in Their Enterprise

By way of a highlights list or checklist (in case you are seeking confirmation of what you already may know and perhaps some new ideas), this article addresses:

1. Expertise in cash management to meet the most critical need of these enterprises;
2. Recommendations for the early inclusion of QFMs in entrepreneurial management teams;
3. Supporting VCs' initial investment decision-making and post investment activities;
4. In their role as an enabling partner, QFMs can help bring the values of the entrepreneur-leader ('EL') and VC into closer alignment, improving that relationship;
5. With their core competencies, QFMs are essential elements of appropriate controls, governance, and can improve the amount & quality of relevant information available to stakeholders;
6. QFMs must be able to manage their relational dynamics with their EL for better overall collaboration in this dyadic relationship; some already know how, but others are likely to need training & development in this area;
7. Another important relationship in growth-oriented entrepreneurial ventures ('GOEVs') is the VC:EL:CFO triad; eCFOs are uniquely qualified to manage this relationship because of their understanding of each party's objectives, values, and needs;
8. Unique characteristics of the entrepreneurial context include high uncertainty and often information asymmetry; many QFMs are capable of reducing some uncertainties to calculable risks and reducing information asymmetry (partly as a consequence of #7);
9. QFMs training & insights equip them to manage enterprise financial risks through identification, assessment, mitigation, and monitoring;
10. Therefore, recruiting the 'appropriate' QFM can help reduce the enterprise's risk of total failure and underperformance;
11. Many VCs' make an argument to defer onboarding a QFM because of their cost; I propose that the PVA (professional value added) by many QFMs will more than offset their cost and further, the immediate cash impact of their cost can be reduced through innovative compensation arrangements;
12. Experienced eCFOs with a track record in multiple VC-backed ventures may be smart consultants to VCs' own investment committees;
13. QFMs are usually competent to devise relevant custom metrics & KPIs for their enterprises which they can subsequently monitor, report on, and provide meaningful insights about;
14. QFMs can assist VCs in meeting their fund's financial reporting requirements by supporting their need to periodically revalue their investment in the private enterprise;
15. QFMs with GOEV experience are uniquely qualified to maintain their enterprise's cash runway and are very resourceful at doing so, often without diluting equity until the price is right;
16. Many private enterprises and their VCs can benefit by including an appropriately fitted QFM in the entrepreneurial management team earlier than is typically recommended by VCs;
17. By understanding good wingmanship, QFMs/eCFOs can support their EL/CEO and alleviate CEO-VC conflict; this is likely because they types of conflict are similar to those the QFM needs to manage in their own relationship with the EL;
18. Others' research indicates that CFOs may have have superior mental models than CEOs & VCs; thus, their inclusion in the strategic, financing, investing, and operating decisions facing GOEVs could be invaluable and this also supports earlier onboarding;
19. There are likely endemic differences in the personalities, values, beliefs, and attitudes of ELs & CFOs that could diminish fit; eCFOs/QFMs need to be aware of these and how to manage them to achieve the most effective working relationship (because they are considered dispensable if the relationship does not gel, whereas the EL is not considered dispensable in most situations);
20. Finally, when considering a new CFO position in a GOEV, QFMs should use the recruiting opportunity to cultivate a realistic sense of personal fit in multiple dimensions.

Please access the full article for more detailed explanations and justification of these ideas.