Shane Leonard, an experienced CFO with an entrepreneurial background, on becoming a trusted advisor to founders
Oct 6, 2023
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Shane Leonard, experienced CFO with an entrepreneurial background, discusses becoming a trusted advisor to founders and the role of CFOs in startups. They also cover M&A activity and valuations in the tech industry, building trust with stakeholders, the changing role of CFOs in the age of AI and automation, and the significance of clear storytelling for CFOs.
CFOs need to build trust and become trusted advisors by understanding founders' motivations and offering strategic guidance.
CFOs should balance risk aversion with the founder's comfort with risk, making calculated decisions and providing financial perspectives.
Deep dives
Building Trust and Becoming a Trusted Advisor
In this podcast episode, Shane Leonard, an experienced CFO, discusses the importance of CFOs building trust and becoming trusted advisors to founders and CEOs. He emphasizes the need for CFOs to understand what drives and motivates founders, while also recognizing the importance of offering guidance and strategic insights. Shane shares his own career journey, divided into three sections: finance, entrepreneurship, and CFO roles, highlighting the unique perspectives and skills that come from diverse experiences. He also mentions the challenge for CFOs of understanding risk in the startup world and the need to balance financial perspective with the founder's optimism.
Navigating Risk and Focus in the Entrepreneurial Journey
Shane highlights the difference in risk perception between CFOs and founders, emphasizing that while CFOs tend to be more risk-averse, founders are comfortable with taking risks and focusing on product delivery. Drawing on his entrepreneurial experience before becoming a CFO, Shane discusses the importance of understanding the founder's mindset and being willing to take calculated risks. He also stresses the need for focus and making strategic decisions, rather than pursuing multiple options simultaneously. Shane shares an example of how a CFO's financial perspective can help identify profitability issues with different client segments, even when founders might be solely focused on top-line growth.
The Changing Funding Landscape and the Role of PE
Shane and Guy discuss the changing funding landscape, with less certainty around big tech acquisitions and increased focus on burn rates, profitability, and cash flow positive business models. They acknowledge the challenges faced by tech startups in the current climate and the potential shift towards private equity exits. They mention the possibility of CFOs in venture-backed businesses finding themselves in PE-backed businesses as a viable exit option. The conversation also touches on the need for CFOs to have difficult conversations with founders about funding, including the possibility of shutting down the business if necessary.
The Evolving Role of CFOs with AI and Automation
Shane and Guy discuss the impact of AI and automation on the CFO role. They highlight the potential benefits, such as improved data capture, real-time reporting, and better forecasting capabilities. They also mention the challenges of dealing with a vast amount of data and the need for CFOs to filter through the noise to identify critical information. They caution against solely focusing on cost-saving automation in finance functions and emphasize the importance of CFOs focusing on growth, strategy, and driving value in the organization. They also discuss the potential for AI to support decision-making by recommending relevant metrics and visualizing data.
Shane Leonard and Guy Hutchinson talk through the path for Tech CFOs to become the trusted advisor to the CEO.
Our regular listeners will know CFOs aren't just about numbers and crunching out financial statements. In the world of VC backed Tech, we are often working with founders who are primarily focused on product and achieving that early traction
At this stage you need the CFO to take on a wider remit, becoming that vital trusted adviser. Shane discusses the optimal path for taking on this important role.
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