VC funds can vary significantly in the size and scale of their operations. Let’s take a hypothetical company that manages three funds:
- Management is responsible for three fund audits, three quarterly reports, etc. (Basically, three of everything.)
- Each fund must:
- Manage distributions (from IPOs and M&A)
- Field questions from multiple lending partners
- Schedule and manage meetings
As a VC investor, however, you should be focusing on growing your portfolio, not taking calls from the bank. You might not need a full-time CFO (yet), so that’s where hiring an outsourced CFO can come in handy.
This part-time CFO can:
Serve as a Visionary
A CFO can help you think about your vision and the culture that will grow from it. Many startups can’t articulate what and where they intend to be in three or four years or what long-term success looks like to them. (In the early stages of growth, surviving and making money – even just a little – is success.) A CFO can bring their full potential to light and offer guidance in making investment decisions.
An outsourced CFO will manage accounting, including fund accounting, controls, tax functions, banking, lines of credit reporting, and regulatory compliance, so you don't have to.
Assist with Due Diligence
Angel investors who play early in the game may have a less formal due diligence process, but due diligence is a necessary component of any successful investment strategy. Investors use due diligence as an indicator of your overall financial health as well as a litmus test of the management team. During due diligence, the CFO can help you respond promptly, answer questions directly and thoroughly, and be straightforward and transparent with financial information.
Offer Guidance During Rapid Portfolio Growth
Working with a CFO is especially important when your business is trying to grow and potentially reach IPO stage. You and your advisors can likely lead the company through its early-stage investments, but don’t wait too long to bring in a CFO, as they won’t have sufficient time to learn the business before the pre-IPO activity begins.
Manage Portfolio Tracking and Investment Performance
Although an Excel spreadsheet is enough for you to keep track of your performance now, it won’t always be. As your portfolio grows, it’s vital to make sure your investments are making money. A CFO will keep an eye on how your business is performing and advise you when it’s time to make a move.
If you’re considering working with a CFO to help manage your investment portfolio, contact us today. We have the experience and expertise to help your business grow.