Start-ups as we know are notoriously risky ventures but they do tend to carry a factor that few large Top 20 companies offer: excitement and a genuine stake in both ownership and in the “making a difference factor”. In Silicon Valley where the mantra from venture capitalists is “we’ll give you the money but get your self a sharp CFO first”. It seems that’s happening in Australia too. One time internet entrepreneur-turned venture capital fund manager, Domenic Carosa believes that it is possible for early stage ventures to attract top talent because of the “sizzle” factor. He says that an early stage venture particularly one based on technology development is going to be revenue and cash flow poor, thus not able to pay normal market rates for top talent. Carosa’s fund, Future Capital Investments, has invested in a number of companies – all internet-based. He believes that securing a CFO or a CEO can be achieved on very low upfront salaries.
In one investee situation he says “We are looking for someone who is currently in a GM or in a managerial role that is looking to move up and be CEO. It's a great career progression for someone that wants to step up and who will have a lot of support around them (mentoring etc). Many who are earning $200k+ won’t be jumping at this opportunity - its maybe too small for them.”
In both Silicon Valley and in some of the New York investment bank backed biotech ventures, most of the founder and core staff such as the CFO and the COO are paid with a mix of salary and options. Carosa says “We are offering $80-100k plus equity which is very reasonable for this type of role. It could also work in a CFO-type role. Frankly I am not after someone who is just after the money. You would be surprised that many people are looking to take a step forward in their career and are eager to learn at a small expense to their remuneration. Furthermore, equity will be a driver for people, particularly in the internet space.”
While there have been many flavours of the CFO role over the course of business history, the CFO's job was to make sure the numbers were correct, and served up in a timely fashion. They would have to stand up to auditors, analysts, shareholders, and the ATO. Beyond that, he or she had to deal with accountabilities such as governance and compliance, borrowing and repaying debt, mergers and acquisitions – all complex processes, but still typically in the context of managing the mechanics of a process.
It is clear from comments and experiences of investment bankers that there is an additional expectation and that is to take on a value added role. Since the role is less about management and rather, of that critical role of managing cash flow, the CFO is in a prime position to add value to the business by providing analysis and presenting what-if scenarios. Perhaps a front row seat for CFOs in early stage ventures will attract some grey-haired CFOs in the future.