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Rocket ship

Startup CFOs join forces to tackle COVID-19 and scale up challenges


It’s tough enough being a CFO of a high growth startup, let alone dealing with the economic shock caused by COVID-19. Nick Levine explores how a group of startup CFOs are helping each other thrive in these disruptive times.

30th Apr 2020
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The last decade has seen a mushrooming of high growth technology startup companies in the UK (there are now 13 nationally based startups with a valuation of over $1bn). Unsurprisingly, this has resulted in an increasing number of accountants specialising in FD and CFO roles in this category of business.

In 2012, after realising that a forum did not exist for finance leaders in startups to exchange ideas, Guy Hutchinson and David Lee created an informal networking group for similar individuals to provide peer support. 

The attributes and skillsets needed by finance professionals in leadership positions in startups are not typical to those associated with traditional companies. Leaders need to be able to have an aptitude for problem-solving, embrace change and an innate understanding and appreciation of what makes entrepreneurs tick. 

In the current economic environment, skills around managing change are especially vital due to general business disruption caused by COVID-19.

During the pandemic, the Startup CFO group is providing much-needed support for accountants in high growth businesses accessing government schemes and wargaming a range of scenarios for their companies.

Beginnings and development of the group

The idea for the group was birthed in a London pub eight years ago, with Hutchinson (FD of Onefinestay at the time) and Lee (then CFO of Mendeley) initially signed up around 30 members by trawling technology websites to identify startups who had recently raised equity funding.

The first iteration of the group started as an informal pub meetup and talks from its members: Alex Gayer, former CFO of Swiftkey and Receipt Bank, and Mike Wroe, the former CFO of Just Eat. 

Over the last 18 months, the group has significantly scaled up. Portfolio CFOs Lambro Anastaskiou and Prakash Shah have joined the initial two founders to help professionalise the entity. The group now has over 400 members and is run similarly to a private members club.

“We’ve spent several years working on this and more recently have given greater consideration to how the group is curated. To join, you need to be in a financial leadership role in a tech startup and align with our values. Predominantly these consist of participating and positively contributing in the group via the Slack channel,” says Hutchinson. 

How to break out of corporate life

The skillset needed to work in startups differs from corporates. Hutchinson lists the key attributes as understanding the psychology of founders, alongside a willingness to learn and thrive in fast-paced environments which do not have established processes or structures. 

Hutchinson believes that accountants who have the aspiration to work in tech startups should first find a way to socialise with founders. Entrepreneurs tend to have a higher propensity for risk, and accountants can benefit from learning what it takes to build a startup, alongside the different personality types of founders. 

To pivot from a corporate into startups he recommends finance professionals to offer limited support for a couple of days a month to seed-stage startups for free in return for building experience, and if possible a few shares.

“If you can support startups by working one or two days a month, helping them build a financial model or advice on metrics and financial reporting and this becomes significant enough to put on your LinkedIn profile this will probably set you on a path to take on your first tech start-up role in finance and make you qualified to be part of the group and learning forum.”

Peer support for COVID-19

Presently the group is providing much-needed peer support for the pandemic. The most popular topics are to do with government support and comparisons with how the UK’s initiatives compare to others from around the world. 

There was initially some frustration that CBILS would not be made available to support high growth loss-making businesses, the category which most tech startups fall into, but the announcement of the Future Fund overcame concerns.

CFOs in the group are re-engineering their financial models, but their approach is different to that of standard businesses due to the need to maintain cash as well as balancing resources so that their products and services can continue to be developed over the longer term. 

“In startup restructuring, you essentially look to maintain the people you need to operate at your transactional level and also those to build the future business. These are typically engineers and product people. They become the sacred cows.”

While it is likely that COVID-19 will reduce startup investment activity, CFOs in the group who were already advanced in new equity negotiations have typically not had their offers withdrawn. 

“The vast majority of companies who have term sheets will close on those terms. However, the markets are closed, and there are unlikely to be any new deals done in the near future, especially for those seeking to raise investment for the first time. Companies which close deals in the next 3 to 6 months will find it harder to justify a higher valuation given the tougher economic environment.”

Future plans of the group include curating an annual one-day event, and bringing together startup finance leaders in a face to face learning environment. The event is likely to take place in 2021 and a number of guest speakers and sponsors have already been lined up for the prospective event.

The group is free to join and members can apply to join here


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