I Need Finance Help – What Role Should I Hire?

In November, I shared some thoughts on recognizing the “signs” that it might be time to bring on a finance professional to help the company scale, produce financial materials you might be needing, and provide leverage for one of the most valuable assets in a young company: “Founder time and focus.”

When our Founders make the decision that it is time to invest in permanent financial support—transitioning from the use of outside consultants/support or doing the finance work themselves—there are a series of fairly common questions:

• What are the roles I should be looking to fill?
• Who do I hire first?
• What are the differences in people who might fill the different roles?

At True, we’ve worked with our portfolio companies to answer many of these questions, and I have shared a few of our learnings below that might be helpful.

What are the roles I should be looking to fill?

Sorry, but there is no “easy answer” on this one. Depending on the size of the organization, existing business complexity, pace of growth, financing needs, etc., the answer here can be different in each company. However, I think it’s helpful to understand the three key roles in a mature finance organization to better understand what fits best for your company.

1. Controller

In my opinion, a talented controller is a requirement for any successful companies that are on the path to scale. This may not be the first hire in some circumstances, but will always follow quickly even if you hire a CFO or VP finance first.

Key characteristics/responsibilities for this role:

• Ability to get the details accurately recorded; set and keep solid, repeatable and routine processes.
• Able to assess the systems needed to record core transactions, and have background in scaling both people and data systems.
• Good industry experience/background; comfortable with the job description of inside, repetitive data-management in support of the company strategies.
• Comfortable with a broad, and perhaps a bit undefined, job description early on. This can be a bit of a challenge, as great controllers often work best with a fair amount of structure and routine. The ambiguity of a startup can initially be a bit unsettling for some controllers.

The best “career” controllers are often introverts who will not be entirely comfortable in more complex meeting environments, such as board meetings. While not always the case, this can be something to keep in mind with this hire.

2. VP Finance

Higher-growth situations, existing revenue recognition issues and significant upcoming financings may cause you to put a higher priority on bringing in a more senior finance hire as your initial hire.

A VP finance is generally a more “senior” hire and is most often going to be complemented by a solid controller. However, based on their background and experience, a VP finance can often fill both roles initially, and the controller hire may be delayed until transaction volume increases, business is scaling, etc.

Key characteristics/responsibilities for this role:

• Likely has background in their past in a controller role, so is experienced in the tactical work that a controller will ultimately need to do.
• The typical VP finance falls into one of two general categories. Great candidates from either category can do the job if there is a match in responsibility, culture, and expectations around growth in the role: (1) Career VP finance who likes this role and does not aspire to become the most senior person in a CFO role and (2) VP finance who is on a career trajectory to the CFO role, and sees this opportunity as the next, appropriate step in that career growth.

While a VP finance may not yet have the experience or background to be the CFO, they would likely be strong in a board or investor environment and would be comfortable discussing operating matters outside of basic financial accounting.

3. CFO

The CFO is the most senior hire in the finance organization, and in most cases will not be the initial finance hire you are likely to make. Your hire here is going to be critical, as this is a strategic partner that needs to be a very strong cultural fit with your leadership team.

Key characteristics/responsibilities for this role:

• This is a very senior executive who should be invited into any organizational, investing or strategic decisions. This needs to be somebody you trust implicitly with any discussions and decisions, no matter how sensitive.
• The best CFOs will usually have experience broader than pure finance, but will have demonstrated skills at building out the finance organization, installing key systems for scaling, and will likely have strong, relevant industry experience.
• The ideal candidates will feel immediately like the “partner” you have always wanted in your discussions around key strategy matters.
• Great candidates will have demonstrated experience in attracting and hiring finance talent, and will have scaled their organizations in prior experiences.
• CFOs with broad experience will often have had experience in the many diverse organizational responsibilities around IT, human resources, facilities, insurance, etc.

Who do You Hire First?

There is no clear answer to this question, but the factors that should influence you are:

• Complexity of the business and financial issues
• Rate of growth and need for support around financing
• Pace of hiring and scale

We are fans of hiring talent at senior levels when it is really needed. The reality is that a high-quality CFO candidate may not be the best fit, and may not be attracted to a very early stage situation where the complexity and substance of the role can best be filled by a controller. The market for all finance talent is tough these days, so matching the right individual with the tasks is important.

Look for future blog posts around:

• How important is direct, relevant industry experience?
• Where do I find the best candidates and what is the role of search firms?
• What should I think about when reviewing resumes?