Financial management @ startups

Xavier Sansó |EAE | Barcelona, 10 March 2016 1

Xavier Sansó es.linkedin.com/in/xaviersanso/

• Xavier Sansó has a BBA and an MBA by ESADE (Barcelona) and is a qualified managementaccountant in the UK (CIMA Adv Dip MA)

• Partner of Delvy, a boutique advisory. Xavier leads the finance practice

• Project-based CFO for startups such as Upptalk, Captio, Qustodio.

• Founder of Spire Bioventures, anincubator/management consulting companythat targets the biotechnology/medical devicesindustry (Barcelona/Silicon Valley)

• Former FP&A EMEA for a Life Sciencesmultinational company (SCIEX), amongst others

2

3

• It is said that over 80% of executives have at some point considered becoming entrepreneurs…

• (Even though less than 20% of them ever try)

• … Certainly 99% of those who read this book should want to work at a startup

4

“When it comes to your career, the worst thing you can do is mistake

activity for progress and then complain about your lack of

progress.” (source)

6

Speaking about personal finances…

• You should really have between 9 and 18 months put aside

• Perfect opportunity for pre-2008 crisis contracts with large severances, if the departure is friendly

• Success in the corporate world is personally inflationary

8

9

You will hear this -- discount it

• “Do you think people will pay for that?”

• “Have you heard of company xyz? I think they tried that and failed.”

10

The wrong considerations

• How much capital have you raised, what is the burn rate, and how long will the money last for? (reality will prove any assessment to be wrong, money is available…for the right project)

• How much equity will I get and how much can it be worth? (what if the company does not survive or there is a downround?)

(source)

11

The right considerations

• How big is the opportunity (if you don’t do it, someone else will)

• Startups are built top-down by hiring and retaining the right team

• Make sure you understand the mentality and the motivation of your financial investors. Polish your VC finance fundamentals, if need be.

• Would you invest in this company?

12

On death and immortality

• The real challenge is not to create a business but to scale it (source)

• Between 25% and 40% of startups die between the stages of Series A to Series B

• About 33% of businesses die because of discrepancies among the founding team (source)

13

14

The CFO is here to change the company

• If you do not foster change you are not doing a good job

• “Consensus requires dissension” – what happens if you don’t know the business well enough?

• “Exile knaves but fight for divas” – not fully sure about this one

• “Think 10X, not 10%”

17

Failure and uncertainty

• Fail often so that you can succeed sooner.

• You often succeed at startups if you are able to stick around for long enough – key is resource optimization, here the CFO can help a lot

• Be ready to take decisions with a much smaller and worse analytical base.

• If possible, think about using external, standard, semi-free data rather than internally produced one. If need be, adapt your metrics to match external definitions, not vice versa.

18

Innovate. Dominate.

• Instill the concept that every moment in business happens only once.

• Do not copy (easy), instead make something new (difficult)

• With a corporate background, you are programmed to grow things from 1 to n. Change that to foster going from 0 to 1.

• Progress comes from monopoly, not from competition. Competition destroys profits for individuals, companies and society as a whole

19

Do not settle on the basics

• One of your most important contributions will be to set the operational cadence: what data needs to be reviewed, when and with whom

• "We are what we repeatedly do. Excellence, then, is not an act, but a habit." – Aristotle. Build strong processes. Improve through iteration. No excuses.

20

Corollary

• Get involved in the company’s culture. This is not a check in-check out job (even if age difference or background makes it difficult)

• “Embrace change”… ever important. Even more so for a startup.

21

22

{ thank you }

es.linkedin.com/in/xaviersanso/Xavier Sansó

Bibliography

http://www.amazon.com/The-Monk-Riddle-Creating-Making/dp/1578516447

https://www.linkedin.com/pulse/20140725005005-15454-why-posting-your-resume-is-the-least-

effective-way-to-get-a-job

https://www.linkedin.com/pulse/article/20140805063038-155853-questions-to-ask-before-

quitting-your-job-to-work-at-a-startup

http://techcrunch.com/2014/07/20/the-problem-with-founders/

https://www.linkedin.com/pulse/20140730121535-8190842-why-we-merged-to-form-onevest

http://www.amazon.com/How-Google-Works-Eric-Schmidt/dp/1455582344

http://www.amazon.com/Zero-One-Notes-Startups-

Future/dp/0804139296/ref=sr_1_1?s=books&ie=UTF8&qid=1457610197&sr=1-

1&keywords=from+zero+to+one

http://sidsavara.com/personal-development/excellence-as-a-habit

23