Leaders of Modern Finance Ep. 4 – Cash Is King, Hosted by Ben Murray ft. Dan Haarmann
On this episode of Leaders of Modern Finance podcast, host Ben Murray of The SaaS CFO is joined by Dan Haarmann, CFO at AiFi, a company creating autonomous store platforms with AI-powered computer vision technology and checkout-free solutions.
Dan joined AiFi at the beginning of 2020, initially to help with fundraising. Along the way, he inherited the roles of being in charge of sales and deployments, which led to him taking on the title of CFO.
Building a Team in the Early Stages
Dan is currently building out their Series B fundraising round, actively raising money out in the market. He recently made his first internal hire, a controller, who will help him build out a full internal team in the coming months.
As with many startups, AiFi outsourced some components of its finance and accounting functions early on. But as the accounting functions have become more complex in the past six months, the time was right to begin thinking about an internal team to manage certain components closely without bearing the brunt of an outside vendor.
He and his new controller will collaborate to decide exactly which components to bring in-house, and she will take over from there. They are going through typical startup growing pains, and Dan wants to make sure they are in control from the beginning. This may mean bringing everything in-house, but he predicts more of a hybrid model between the two.
Beyond SaaS Metrics & Planning Ahead
As with many SaaS startups, Dan’s current focus is on good, fundamental financial management. He has a good relationship with the founders and board members, and together they are focused on metrics like MRR, forecasting, and cash.
Traditional SaaS metrics like churn, lifetime value, and customer acquisition cost may not get as much attention at this stage, because they have relatively few live customers and they haven’t lost any yet. And because they are developing and deploying their own platform, they spend more on R&D than they currently spend on marketing. Many SaaS metrics aren’t relevant to this stage of the organization. But that doesn’t mean they won’t be important in the future. So while Dan may not be living by that data today, he is collecting that data for the future. He knows he will need to use today’s data for future comps.
“I know what the question is going to be,” Dan says. “‘How does this cohort in 2023 compare to the first cohorts that you were getting in 2021?’ If you don’t have that data, you’re going to be spinning your wheels in 2023, trying to figure out just how well the customers that you acquired two years ago performed.”
By knowing he’s collecting and organizing that data today, he can look forward to using it as a comparison benchmark in the future when the cohorts are fully formed to show that the growth is real and exciting.
Telling the Story
A vital element of fundraising is the ability to tell the story and present a clear picture of the vision of the company to potential investors in a way that makes them believe in that vision. Sometimes, the hard numbers and metrics get in the way because they aren’t fully mature enough to support that vision. But there is more to the story, and Dan understands how to present the big picture in a way that is easy to understand.
Building from the Top
Many startup organizations begin their journey with little to no emphasis on accounting and finance. Most founders will be experts in their chosen field, but they may know little about managing the finances of a company.
Because of that, some startups will slowly build the finance and accounting needs from the ground up, plugging holes as those needs arise, and they will wait to add a leader until they feel the company’s size justifies filling that role.
Dan’s philosophy is the opposite; he wants to build a team from the top down. He believes that a finance leader needs to go through all the dirty work to experience exactly what needs to be built and why those roles should be brought in-house.
There are some functions that are inherently commoditized by now, and those roles can be outsourced and addressed through software solutions. By growing with the company through the turbulent times, a team leader, like a controller, can build the right team at the right time to move the organization forward into Series B, Series C, and beyond.
Cash is King
To close the interview, Ben asks Dan for the one piece of advice he would give to up and coming finance leaders who want to be successful.
Dan says it is vitally important to be prepared and knowledgeable about everything impacting cash. When founders or board members or potential investors ask about your cash on hand or your burn runway, they don’t care about how you get to the answer, they just want to know the answer.
You need to be so detailed in your grasp of the cash situation in the organization, that you are able to explain your answers to those questions without hesitation in a way that everyone can understand.
Cash is king.
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