Leaders of Modern Finance Ep. 3: Tips for Building Your Finance Team (by Stage) ft. The DeWinter Group

On this episode of Leaders of Modern Finance, we have Derek DeWinter and Mike Tomasello, co-founders of the DeWinter Group. The duo brings over 50 years of experience in recruiting talent in finance, accounting, and tech. In this episode, they discuss how companies can determine the best times in their growth to bring finance leadership positions aboard.

Over the last six years, the DeWinter group has focused on high-level talent searches for VPs of Finance and CFOs for companies in various stages—from Series A to publicly traded organizations. The number of successful hires they’ve helped companies make gives them the expertise to determine the best things to think about when bringing on finance leadership roles at all stages of growth.

Mike kicks off the discussion with an overview of companies in the Series A to C stages of growth. He points out that A to C represents a wide range of sizes, and the need for finance and accounting leadership will vary for each stage.

Hiring at Series A

A Series A company is likely to be in the early stages of growth with the founder still at the helm, making most or all of the major decisions. At this stage you’re likely to be using basic software for accounting, and you’re worried about the basics of cash flow like generating revenue and paying bills on time. 

If a Series A company is ready to hire, it should be a hybrid hire of someone who is both skilled at accounting and financial planning and analysis. This person needs strong forecasting skills, as well as a handle on controlling transactions for accounting purposes. These roles tend to be titled as ‘Head of Accounting’ or ‘VP of Finance.’ At this stage the company is far from needing a true CFO.

Hiring at Series B

At the Series B stage, the single role that was filled during the Series A stage is now split into two different roles, with a delineation between accounting and finance. A company may bring in a light controller for the accounting department, while also having a head of finance who can own the forecasting aspect of the company.

Hiring at Series C

Series C is a fairly large jump financially from A and B, and you may be looking at a run rate of $100 million. You’re going to need a leader who is experienced in financing, and who has the relationships and experience to secure the necessary funding you need for growth. 

You’ll need someone who is strong in forecasting, and maybe someone who is more strategic in that function. You’re probably looking at bringing someone in who has run the finance aspect of similar organizations from top to bottom. There may also be some cash management responsibilities involved, so this person will likely be a true CFO.

Notes on the Nuances of Hiring in The Bay Area

The DeWinter group has offices in the Bay Area, and Mike and Derek understand that it is a different business landscape than the rest of the country or the rest of the world. There are plenty of traditional companies in the Bay Area that base hiring on hitting certain milestones, like number of users or sales numbers. But many of the tech companies in the area, especially in the A to C stages, are operating with little or no revenue, presenting unique challenges not present in other locations. 

The milestones for hiring finance leaders in these cases are often based on projections or growth. These companies often have first- or second-time founders and board members who are all VCs, and those people tend to be very growth oriented. This results in a lot of pre-revenue hiring that might not happen in other parts of the country or the world.

Importance of Bringing on Critical Thinkers

Another variable that Mike and Derek see in the Valley, is that the speed of growth can be incredibly quick and unpredictable, which makes it difficult to know when to bring in a leader of finance to your organization. Growth depends on serious investments by people who are critical thinkers, and that impacts the type of person you want to hire to run your finance for your organization.

With the speed of growth that is happening lately, most organizations will want to bring in a leader who is also a critical thinker and who is skilled at development, massaging, and pivoting of a model. When VCs invest $50 or $100 million into an organization, they are going to be asking some serious questions in the boardroom, and you’ll need to hire someone who can handle those questions. 

When Preparing for an IPO

Mike and Derek have seen a change in the skills required in the last five to ten years when it comes to hiring finance leaders in Series D and E, especially in organizations that are gearing up for a liquidation event. If you’re getting ready for an IPO, the person you need running your finance needs to be someone with experience with Wall Street, and the requisite reporting requirements that come with that role. 

You’ll also want someone who already has relationships with Wall Street, who can manage the expectations that come with an IPO and being a public company. It’s a much bigger role with broader responsibilities that is less technical in nature, and more of a relational and strategic position. 

Adding an Officer

Another change they’ve seen recently is companies facing decisions on whether to add another officer, like a chief accounting officer, to the organization at a time when in years past they could just continue on with a VP of accounting or VP controller. Some companies have trouble justifying the addition of a new officer, but leading the finance and accounting of a company heading into an IPO is a vital role, and most organizations would be wise to consider that addition. 

Pulling this person into the company when it is in the late stages of being pre-public provides a lot of protection for the CFO. Someone who is very strong on the compliance side of things can strengthen a critical area where the CFO may not necessarily be an expert.  

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