To help educate Build In SE’s community of startup founders and operators, as well as highlight exciting thought leaders in the region, we’re launching an interview series that highlights key functional areas within scaling organizations. Have an idea for a future topic? Drop us a note in the comments or at ryan@buildinse.com!
Amidst the recent fallout and uncertainty in the startup and regional banking world, this month we wanted to hear from industry experts on how companies can best navigate through choppy treasury management waters by thoughtfully implementing financial strategies and best practices. We asked 3 friends of Build In SE about company-level responses to macro trends, hiring strategies, advice for newer founders, and - of course - their excitement about building companies in the Southeast!
Brittani Roberts is a principal at FINTOP Capital in Nashville, TN, where she focuses on investments in B2B fintech companies.
Peter Inge was previously CFO for NXTsoft, a private equity-backed fintech software company in Birmingham, AL, where he managed the corporate finance function and was significantly involved in operations, sales, and product management.
Eric McCarthy is a principal at Immoderata, a technology investment group focused on companies providing technology infrastructure solutions.
As cash management and preserving runway becomes increasingly critical in a bear market, how should companies think about hiring or building up their finance teams for long-term success?
Brittani: Many startups can still benefit from leveraging outsourced finance professionals rather than hiring a full time CFO, depending on your stage and the business you're in. But as your business gets more complex, for example, with multiple business lines or processing payments and having float accounts, it certainly behooves you to have that function in-house. In a growing and complex organization, a good CFO is the right-hand to the CEO, and will be crucial in getting the company to the next phase, whether that's a fundraise or an acquisition.
What is the first piece of advice you’d give to a new founder regarding building finance strategy or operations?
Peter: For every 1 hour you invest building thoughtful systems & processes in the early stages, you will save 10+ hours of headaches in the later stages.
Eric: Founders should look at the CFO or Head of Finance as a strategic partner; and not just an accountant or controller. Ultimately, a CEO’s job is to allocate capital (money, people, and technology) to where it will have the highest risk-adjusted ROI. This task becomes much easier with a CFO who thinks like an owner, understands business cycles and capital markets, and can motivate a team to strategic outcomes.
Are there any particular macro events or trends you’re keeping an eye out for in the rest of 2023 that impact the CFO’s office?
Peter: I pay far more attention to what's within my control (business operations & execution) than what's outside of my control (macro events). However, you still have to be informed. Right now, I am primarily keeping an eye on changes in interest rates and inflation, and the corresponding impact on the overall economic picture, so we can position accordingly.
Eric: I am keeping a close eye on monetary policy. The Federal Reserve has been raising rates consistently over the last year, intending to slow economic activity and force prices to fall. We’ve seen some of these impacts in the public capital markets, and they are starting to flow through to private equity (and venture) markets. In this environment, finance teams should stress revenue by reducing forward projections by (at least) 50% - unless you have exceptional visibility, look to cut excess capacity, and make sure that cash burn is at an adequate level to last 18-24 months; particularly if you have raised capital in the last year.
Brittani: As most of the industry is, we've been paying a lot of attention to Generative AI. We already have companies in our portfolio using simple AI use cases on their platforms that are driving efficiency, such as the ability to type questions like "what was my average cash burn for the last 8 quarters, in graph form"? We haven't even begun to scratch the surface on potential use cases and efficiencies, but we do believe it will imminently augment the finance function and change the way finance professionals interact with their existing toolset.
What is driving your optimism about the future for startups and the startup community in the Southeast? What do you think is an opportunity the region should seize upon?
Peter: I am optimistic on startups in the Southeast partially because I am optimistic on startups everywhere! There are more resources and supporting technologies for entrepreneurs than ever before. In the Southeast specifically, I know we have many talented operators and entrepreneurs, but we have been historically overlooked for the major markets. That has begun to change in recent years, and I expect that trend to continue.
Eric: The Southeast is vibrant and growing. The region is home to leading companies in many industries, global transportation & shipping hubs, world-class universities, and the best food in the world! Large tech companies like Google, Microsoft, and Amazon are starting to see the light and set up shop in the region. More startups are beginning to see the benefits of starting and staying in the Southeast. All of this company activity is attracting more investment capital to the region, which will attract more company activity - creating a virtuous growth cycle. I’m confident that several cities in the Southeast will become primary innovation hubs in the coming years and decades.
Brittani: The Southeast is a great place to build a business, and is no longer being overlooked for other historically popular geographies. One of the things we can do to continue this trajectory is to ensure that new businesses have the incentives, resources, and support to attract talent and take that leap in Southeast cities. For example, there are a number of accelerators like CDL in Atlanta, RevTech labs in Charlotte, and Nashville's new Project Fintech that are helping to boost investment and support for startups in the region.
Big thanks to Brittani, Peter, and Eric for their time and thoughts - be sure to stay tuned for future iterations of our interview series, and let us know in the comments what you’d like to see covered next!