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Financial leadership of a scale-up tech company

ARKK's Chief Financial Officer, Jenny Himsley, explains the role of a CFO in a scale-up Fintech company as well as the challenges and benefits that it offers.

 

Working in a company like ARKK is unique. We’re what can be considered a scale-up company, an established start-up with rapid growth, meaning that there are a unique set of challenges that the company and CFOs face.

 

Being the CFO of a scale-up company essentially means that you're wearing multiple hats, no two days are the same and you have to be ok with that. It also provides benefits that you just wouldn't be able to get in a more corporate, larger organisation.

 

In this article I want to explore the various roles that a scale-up CFO plays and why I find it so exciting.

 

Full ownership of the finance function

Larger businesses are likely to have dedicated specialists within the finance function that will manage tasks such as budgets and forecasting, tax, compliance, financial reports and statutory accounts - the list goes on. Within smaller firms, the lack of dedicated teams or personnel for these tasks means that you need to be knowledgeable in a wide variety of areas.

 

Due to the size and resources of a scale-up, CFOs will often lead departments such as legal, HR and payroll in addition to having full ownership of the finance function. Due to the diverse range of skills required recruitment of the right person is key, the role requires an enormous range of experience and the desire to roll up your sleeves and get involved in the day to day. This provides an opportunity for considerable influence within the business as well as fast personal growth and development which I find it very rewarding. 

 

Managing bank and investor relations

In a tech scale-up you have to be able to balance a complex combination of investor relations and being the CEO's confidant, this can leave you in the middle of opposing views.  

 

Often SMEs and scale-ups rely on initial funding coming from seed investors, venture capital or bank debt. Any investors in the company need to be continually updated on the organisation's strategy, cash flow position and kept abreast of any issues that may arise. An open dialogue is essential as one thing that can damage investor relations are surprises. On the other hand, the CEO relies on the CFO to confide in for difficult and crucial decisions. It's a constant balancing act.

 

Business partner to the CEO

Following on from the previous point, a CFO may struggle in their role if they don't have a strong working relationship with the CEO. This combination, as with all team members, has to be mutually beneficial. The CEO and CFO need to have a complementary skill set, able to fill in each other's gaps and work harmoniously towards a shared goal of funding, growing and possibly eventually selling the business.

 

The involvement that a CFO in a scale-up has on business strategy and decisions is significant and is often unique to smaller organisations. I work very closely with the CEO to make decisions on the best direction for the business. This requires me to be across all aspects of the business to ensure that the right decisions are made, both from a financial and non-financial perspective. It might not be for everyone, but I love the fact that I'm able to impact such a wide array of business elements and work so closely with the CEO.

 

Lead M&A activity

SME's, in particular tech scale-ups, can be loss-making for a few years. As I previously mentioned, development costs can run high and in a SaaS business like ARKK recurring revenue provides an incredibly stable business model. However, the initial user base needs to be established before profits become tangible. 

 

To support this growth, businesses undergo multiple rounds of funding which is a time-consuming process that must be carefully managed by the CFO. 

 

Overall, being the CFO of a scale-up tech company has similarities to working within an SME. There are some fundamental differences that tech firms have with investment, funding and revenue but the responsibility and ownership that come along with it are second to none. Coupled with the access to significantly influence business decisions, the scale-up CFO position is demanding but extremely rewarding.