Hypergrowth Requires Building and Scaling Financial Go-To-Market Expertise

~ 9 min read | December 16

Building and scaling the Finance function early creates a culture of data-centric decision-making as well as continued experimentation on growth. This balance of structure with chaos is particularly critical for the thrival of a hyper-growth company.

That begins with getting a company’s bookkeeping and accounting in order. This lays the foundation for accurate reporting of unit economics on the cost and cash side of the business.

Unfortunately, it can take quite a lot of time and “brain-numbing” labor to fix retroactively (i.e. go through every single business transaction) if it is not done correctly from incorporation. The key reason is that most accounting tools (outside of Xero and Quickbooks) are designed in a way to make it easy for a bookkeeper to produce reporting and filings in compliance with statutory requirements of the country of establishment. These reports cannot be easily translated to management accounting, which is ultimately used to produce insights and make strategic decisions on how to run a business.

Without management accounting, a business cannot produce operational metrics or financial reporting including having confidence in its unit economics and understanding which channels of acquisition are scalable. This effectively means business leaders are making decisions half-blind and purely based on ‘gut instinct’.

In order to avoid this common pitfall for hyper-growth scale-ups, it is crucial to make sure you have a solid Finance and Operations organization.

With today’s competitive labor market, there is a lot of confusion around roles and expectations within startups and scaleups, and we’d like to set the record straight.

Proactively planning ensures a business recruits the right talent for the right needs before the problems occur and avoid inflating titles and compensation for new leaders who do not have the right skills or the business is not ready for.

For the Head of Finance role, in particular, a scale-up needs that person in place before a Series A funding round; somewhere between 15-20 full-time employees. If you have 50 people, are on a hyper-growth journey, and don’t have a Head of Finance in place, there are probably already control and reporting challenges in the business since there likely is not a ‘single source of truth’ on the cost of acquisition and working capital.

What makes the Head of Finance so important?

A Head of Finance is able to translate statutory reporting that applies general principles for all business into management accounting which is business model specific. They provide cost and cash visibility as well as financial and business control. The most talented ones also bring a commercial, data-centric mindset to operational scaling – always thinking two steps ahead. A Head of Finance leader is pragmatic about business risk yet balances it with a growth mindset driven by revenue-first thinking. 

This includes the ability to adapt and drive organizational changes and shifts in hiring plans on a monthly or quarterly basis based on variances in revenue forecast and business performance. A Head of Finance en route to becoming a VP of Finance is able to do this successfully while ensuring that forecasts and actual results are within 20% (or better) of plan.

Nailing that kind of accuracy comes down to having an excellent understanding of:

  • Cost of sales – or “cost to deliver” a solution, which lets you measure your gross margin.
  • Cost of customer acquisition (CAC), which is ultimately a mixture of marketing, sales, and customer success. 
  • Cost of build, which is your R&D and product development cost. 

These financial metrics are key to understanding the operating leverage of a business, particularly a technology or SaaS business, which is ultimately what drives company valuation. 

You need to be able to trust the numbers, and trust the people and processes behind the numbers. That’s the only way to make sound business decisions.

The Head of Finance also has to provide clear visibility on cash flow and cash management – and think about how to make it more effective. That comes down to monitoring and managing liquidity and working capital – in other words, how and when money flows in and out of a company. Optimizing working capital will reduce the external funding need which has a direct impact on business dilution and exit options. In contrast, customer acquisition cost (commonly referred to as “CAC”) is better served with equity or debt funding from external investors. Being able to separate this from day one is fundamental.

Being a Head of Finance also means being an effective communicator and strong business partner. It’s about supporting a business with its priorities and making the jobs of other leaders easier and better. That’s why it is so essential to bring in someone as soon as your company is getting off the ground so that they can provide a trusted guiding light for the company. 

For all these reasons, you should be hiring a Head of Finance as your business scales; let’s discuss how it differs from other roles within the Finance and Operations organization. 

The Difference Between Head of Finance and Other Roles 

A Financial Controller, RevOps, VP of Finance, or CFO may all seem viable options to bring into your business, depending on the business needs. They are however different roles and have distinct qualifications in their own right. 

Financial Controller 

A Financial Controller is best suited for implementing processes and systems to ensure good control over costs and cash. Typically, a Controller gives visibility into cost and cash in any given period. It is common to see the Head of Finance also take on the responsibilities attached to a Controller. Modern Financial Controllers are no longer mere guardians of expenditure and cash flow, but also leverage the right technology.

A Head of Finance leader is pragmatic about business risk yet balances it with a growth mindset driven by revenue-first thinking. They are thinking about risk management and financing, and how team and business initiatives ultimately drive revenue for the company. They have the curiosity to deeply understand different mechanics of marketing, sales, and product development in order to affect resource allocation and capacity planning necessary for budget setting and forecasting accuracy. So having that mindset, that growth mindset, separates these two distinct though related roles.

RevOps 

Revenue Operations (“RevOps”) is really about having data integrity and fast, easy access to leading operational KPIs for the business. It’s about managing the inputs and outputs for a single source of truth across the business, putting in place the processes, the systems, and enabling people to do that. So it’s standardizing and scaling the whole go-to-market playbook.

This includes ensuring there is one definition of team and business-level KPIs, for instance, product qualified leads, marketing qualified leads, sales qualified leads, and opportunities, and won deals. They are expected to deliver accurate and consistent data weekly, monthly, quarterly, and annually to all business leaders including the VP Finance or CFO who combines it with the existing team and hiring plan in order to affect organizational decisions.

VP Finance (sometimes referred to as “Financial Director”) 

Often, an excellent Head of Finance has the aptitude to grow into a VP Finance (or sometimes referred to as the “Financial Director” in a linear-growth environment). The distinction between these two roles boils down to that individual’s ability to drive revenue visibility with accuracy. A VP Finance knows how to interpret, influence, and change revenue visibility and predictability across every function within a business and the company overall. This leader usually has done a comparable role with one or two hypergrowth companies with the same business model and/or industry sector in the past two to five years.

The term “Finance Director” is falling out of style, especially among startups. But, if you’re looking for someone to fill a role like this, to have someone very good in the financial space and knows how to make an impact instantly, a VP Finance could be the way to go – they are the leaders of the process. A Head of Finance is an influencer and in operational delivery mode all the time.

An ideal SaaS VP of Finance would have supported a business through one or two funding rounds and perhaps even a company exit under the guidance of a SaaS CFO. They are well-versed in Salesforce, HubSpot, and maybe even Pipedrive. They should know how to lead the integration of a SaaS solution like Chargebee or other subscription management solutions with core accounting systems such as Xero or Quickbooks. And they’re able to think about global businesses with customers and people spread across many countries. They should know how to deal with multiple currencies and operating subsidiaries and have led the selection and implementation process of ERP solutions like NetSuite which become necessary for a business when consolidated reporting becomes challenging. Equally as important, they can help their colleagues in marketing, sales, and product get better visibility on where future growth is coming from. So in practice, they are influencing headcount planning, new hire plan, capacity planning, and compensation using data, SaaS metrics, and financial reporting.

CFO 

A VP Finance is predominantly responsible for deeply integrated and agile planning that flows up to strategy and flows down to operational execution. In comparison, a CFO – particularly a Modern CFO – has a direct impact on go-to-market strategy including funding strategy and investor management. How do you optimize flexibility versus the cost of capital for a business? How do you communicate inside the company, and also with your Board and the broader financial markets on how leadership is creating value?

Scaling a Data-Centric Culture and Go-To-Market expertise

Each profile of professionals described has a core set of expertise – the way they were trained to think and operate, a distinct area which they have mastered.

In a hyper-growth environment, as the go-to-market motions and organizational changes are so frequent, having a ‘pod structure’ where all specialists are working in parallel together – just like in Sales or Product – ensures a startup scales successfully to a growth business of scale. Practically, this means having a team that includes a Modern CFO, VP Finance, RevOps, Head of Finance, and a Financial Controller. There is no time for ‘up-and-coming’ leaders to learn on the job – you simply have to make decisions fast, and execute with precision, at scale. This is the only way to guarantee continued revenue growth without disproportionately burning cash and diluting existing shareholders.

With this Modern Finance setup, a business ensures success in attracting all funding options – be it venture, growth equity, private equity, debt, or strategic financing.

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Joyce Mackenzie Liu

Joyce is a modern CFO and the founder of Pegafund. She has been working at the intersection of financial services and technology since 2007. Over the past nine years, she has been an advisor, investor, and board member of European and US B2B software companies.