My Vision

Every tech startup journey starts from a 3 legged stool that includes Engineering (ENG), Sales & Marketing (S&M) and Administration (ADM).  By the term ADM, I refer to a broad scope of Finance /Accounting /Tax /Legal /HR functions.  ADM is the poor 3rd cousin of this 3 legged tech startup stool.  Founders must initially focus on ENG, the development of a commercial widgit / software prototype.  Following some success there, Founders can be shocked to discover their S&M function may require a similar level of investment to the ENG function, as customers failed to line up nicely at the door after they posted a “buy now” button on their website.

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Based on my CFO experience with over 60 tech startups during a period of over 35 years, ADM is often poorly done because many Founders assume ADM problems can be fixed after revenue traction is gained (success seems likely), by throwing money at any problems that surface.  In fairness, less experienced Founders often don’t know what they don’t know, and they are already overwhelmed with ENG issues (getting the darn thing working in the real world) and S&M issues (will you please, please buy my prototype?).  ADM problems often seem less urgent in comparison, and relatively understandable (I can figure this out for myself once I have a bit of time).

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ADM problems are broadly in the domain of a Fractional CFO.  The reality is that some legal / tax issues are impossible to fix down the road, while others are prohibitively expensive to fix.  A bit of early money invested in Fractional CFO / Financial Mentor advice can steer the tech startup around axel busting ADM potholes that are relatively easily avoided.    Serial entrepreneurs generally have enough bruises and / or smarts to invest early and appropriately in the bits of ADM they have less experience with, where "a stitch in time saves nine".  The good news for Founders is that a relatively light touch of ADM guidance is needed in the early days when there is very little weight on the tech startup foundation.  With growth, there is an ongoing requirement to scale up investment in a tech startup's ADM foundation.

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Getting Fractional CFO guidance from day1 will avoid the need for “Transformational Change”, but only a tiny percentage of tech startups have this foresight.  The next best option is for tech startups to invest in upgrading their ADM function (Finance /Accounting /Tax /Legal /HR) as early as possible.  Earlier intervention means less painful surgery, as some level of ADM related “Transformational Change” is almost always required before tech startup success is possible.  No fresh investment or attractive M&A exit will happen if the ADM function is a total mess, regardless of how well the ENG and S&M functions are performing.  Hence the title of my future book “Transformational Change - A Financial Foundation for Tech Startup Success”.