Founderfuel backoffice talk oct 4 2011
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Transcript of Founderfuel backoffice talk oct 4 2011
© Mark MacLeod 2011
Startup
BackOffice
101Mark MacLeod
@startupcfoReal Ventures
© Mark MacLeod 2011
Agenda
What is “Back Office”? & why does it matter?Your Back Office ToolkitMeasuring Your BusinessHiring a CFOWhat Investors Expect...
© Mark MacLeod 2011
What is “Back Office”?
© Mark MacLeod 2011
Startup Back office
AccountingPayroll, HR, BenefitsLegal stuffInvestor RelationsBoard & Governance
© Mark MacLeod 2011
Why it Matters...
© Mark MacLeod 2011
Trust
Accounting: Accurate, reliable, timely, cash controlPayroll, HR, Benefits: Reliable, tax, etcLegal stuff: Accessible, documentedInvestor Relations: Lots of infoBoard & Governance: Documented decisions
© Mark MacLeod 2011
StartupBack office
Toolkit
© Mark MacLeod 2011
Startup Accounting...
Do this...
Also good (but your accountant won’t like them...)
Don’t do this...
© Mark MacLeod 2011
Startup Payroll & Benefits...
The default...
Bonus tool: It’s free...
Don’t do it in house
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Startup legals...
Standard Agreements...
Everything else
Don’t do this...
Your VCs
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Startup Cash Accounting Tips...
© Mark MacLeod 2011
Startup Accounting Tips...
Vendor Payments: 15th & end of month
Credit card for everything
Outsource & batch (no more than 2x/
month)
© Mark MacLeod 2011
Startup Legal / Governance Tips...
Scan & archive everything
NDA list
Use lawyer only for templates & key docs
Must: IP assignment, confidentiality, Work for
hire
© Mark MacLeod 2011
Measuring Your Business
The basic financial reporting package
Balance Sheet: Assets, liabilities, equityOperating Statement: Revenues, expenses
Cashflow: Sources and uses of cashDashboard: Key financial and non-financial metrics
© Mark MacLeod 2011
Sample Financials...
ASSETS
CurrentCash & equivalents
Accounts receivable
Other receivables
Prepaid expenses
Long-TermCapital assets, net
Intellectual property
TOTAL ASSETS
LIABILITIES & DEFICITCurrent
Accounts payable & accrued liabilities
Bank loan
Deferred revenue
TOTAL LIABILITIES
SHAREHOLDERS' EQUITYCommon Shares
Preferred 'A' Shares
Preferred 'B' Shares
Accumulated deficit
Share issuance costs
Contributed surplus
ACME STARTUPBALANCE SHEETJanuary 31, 2000
(All amounts in 000s CAD$)
ACME STARTUPSTATEMENT OF OPERATIONSFor the year ended Jan. 31, 2009
(All amounts in 000s CAD$)
REVENUES
COST OF DELIVERYHostingCustomer Acquisition (partners)
GROSS MARGIN
OPERATING EXPENSES
Sales & Marketing Personnel Customer Acquisition Marketing programs Travel & other
Research & Development + QA Personnel Equipment, Licensing & Other
Operations Personnel Equipment, Licensing & Other
Corporate Personnel Recruiting Facilities, Insurance & Office Travel & other Communications & IT Professional fees
Total Expenses
EBITDA
AmortizationSRED, GrantsForeign exchangeFinancial
NET LOSS
© Mark MacLeod 2011
Startup Accounting Tips...
ACME STARTUPSTATEMENT OF CASHFLOW
For the year ended Jan. 31, 2009
(All amounts in $ 000s CAD)
CASHFLOWS FROM OPERATING ACTIVITIES
Income (Loss) for the period
Other non-cash items
Change in non-cash operating working capital items
CASHFLOWS FROM FINANCING ACTIVITIESIssuance of Shares (net of issuance costs)
Loans
CASHFLOWS FROM INVESTING ACTIVITIESAdditions to property, plant and equipment
Increase in intangible assets
DECREASE IN CASH AND EQUIVALENTS
CASH AND EQUIVALENTS - BEGINNING OF PERIOD
CASH AND EQUIVALENTS - END OF PERIOD
WATERFALL
AcquisitionFor every 100 visitors (not including usage)
Registration
Activation
Retention
USERSNew
Total
USAGEStat 1
Stat 2
Stat 3
EMPLOYEES
Net change
S & M
R & D
Ops
G & A
Budgeted hires
Actual hires
LIQUIDITY
Cash & Equivalents
Working Capital
Number of months' pure burn on hand
© Mark MacLeod 2011
Tips for Good Reporting
Summary format: Don’t send your whole GLRound up: $000s of $Narrative: Tell your stakeholders what’s going onDashboard: Give people a quick pulse of your
Operating metricsUser and revenue trendsHiringCash burn & runway
Don’t spend a lot of time on this early on
© Mark MacLeod 2011
Non-Financial Measurement..
All web businesses should be data-driven!Know your
Waterfall & conversion rates – visitors to register to active to paid
Sources of best usersUsage patternsVirality driversCustomer acquisition cost by sourceChurnAdvance screening for low usage users who may
churn and high usage folks who might pay
© Mark MacLeod 2011
Hiring a CFO
This... Not this...
© Mark MacLeod 2011
Role of the CFO
Financier: Keep the bank flushTechnician: Controls, reportingCloser: Help bring in the big dealsOperator: Process, metrics, disciplineLawyer: Check everything with words & a
signatureSys Admin: Systems, information, data dudeCheapskate: Say “NO” a lotConsigliere: Any Godfather fans out there know
what I’m talking about…
© Mark MacLeod 2011
When you need one...
Advisor: From day 1 (opportunity assessment)Part time: Early (help with 1st funding, etc.)Full time: “B” round
© Mark MacLeod 2011
Investor Expectations
Accurate, consistent & timely info
You understand key metrics
You know where $ are being spent
Package:- Monthly financials & dashboard- Regular blurb from the CEO (incubator - weekly; seed -
bi-weekly; series A on - monthly)- One on one call before board meetings or if you have
major issues- Full transparency (good, bad, ugly...)
© Mark MacLeod 2011
q & a
Questions?
© Mark MacLeod 2011
thank you
mark macleodtwitter: @startupcfo
blog: startupcfo.caweb: realventures.com
about.me/markmacleod