Many fintech startups will eventually fail, but some make their failure all the more likely by neglecting their finance team. In previous, more abundant fundraising periods, some smaller firms would go years before making their first finance hire – and finance executives at major fintechs think they’re making a mistake.
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Adam Swiecicki, former CFO of banking fintech Brex and current CFO of workforce/payroll management fintech Rippling, recently appeared on a podcast from VC firm Kleiner Perkins. He said that someone with a strategic finance background should be “the first hire that you want to make.” Specifically, he said you should be looking for a “generalist Swiss army knife” with a background in banking or private equity; Swiecicki previously worked in M&A for Morgan Stanley and had stints in both PE and hedge funds. Swiecicki says this role is particularly important for early stage firms as they can become “the thought partner to the CEO” and identify the best areas for growth.
Michael Miao, an ex-Deutsche Bank investment banker and current VP of finance for automation startup Glean, agreed. He said that finance roles in startups are much more than an accounting function, which he said “you can and should outsource” early on. Instead, CFO roles are about critical thinking and being “a general purpose finance athlete” capable of interpreting the very messy data that’s part and parcel with startups. This means being very good at Excel (or rather Google Sheets, which Miao said he controversially loves despite being a former “excel enthusiast”).
Swiecicki advised against hiring directly from banks or PE firms for early-stage CFOs, instead preferring alumni who already had experience at a startup. “There’s just too high of a probability they don’t like working at an early stage company,” he said.
It’s becoming increasingly popular for startups to hire ‘fractional CFOs’, part-time workers who may be acting as CFO for multiple other startups at once. It’s a controversial move; Kirsty MacDonald, a principal at VC firm JamJar Investments, said at last year’s Sifted Summit that she “[has] not seen that work yet.” Instead, she prefers hiring finance executives full time by providing “something that is way more exciting and interesting than their current career path.”
The excitement for bankers joining fintech is often about having ‘skin in the game’ in the form of early stage equity. The later you join an early stage firm, though, the less you earn; Peter Walker, head of insights at Carta said late last year that the first hire by a startup averages 1.5% equity in their company, but that falls to just 0.3% by the sixth hire. If fintechs want the most elite ex-bankers leading their finance function, they’ll need to heed Swiecicki’s advice of hiring them first.
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