The financial operations and needs of any startup or small business can be complex and time consuming. Without someone dedicated to overseeing these key management and operational responsibilities, startups can quickly get into financial trouble. Jacob Sheldon worked with startups and SMBs as a consultant across a variety of sectors. He noticed they had different challenges with respect to keeping their finances in order, creating SiliconCFO as a solution. SiliconCFO helps these newer companies bring on a part-time Chief Financial Officer (CFO) to assist them with their firms’ financial operations and management. The Los Angeles-based company is currently bootstrapped.
Frederick Daso: What drives the pricing for getting financial management and operations for your company?
Jacob Sheldon: It’s variable depending on what the company wants their CFO to do, and if they decide to go for a low-end, mid-range, or high-end priced CFO. Good to great part-time CFOs can cost companies anywhere from $50 per hour to $250 per hour, with the average being around $100 to $125 per hour. If you are trying to bootstrap your company and need a part-time CFO to handle weekly cash-flow forecasts, payroll, and other small financial operations tasks, you should expect the CFO to charge you between $1000 and $2000 per month.
Daso: How did you decide to target early-stage and bootstrapped companies?
Sheldon: Those are the types of businesses that often need financial help the most! Early-stage startups often need assistance with projections, fundraising, and systems setup. Bootstrapping companies, such as a software development firm or marketing agency, need to keep a close eye on cash-flow and often have more complex bookkeeping and payroll. I decided to focus on these businesses because I witnessed their problems and how they currently handle them. They often can’t turn to CFO-services agencies, which are priced for high-growth startups, and finding a CFO through their network is pretty hit-or-miss. SiliconCFO’s pre-vetted talent pool solves the problem of “ease-of-access” to CFOs, while our matching system ensures that we connect companies with the right solutions for their needs.
Daso: What other size companies do you hope to bring into your customer base? Why?
Sheldon: Within the next year, I hope to expand to companies with over $10m per year in revenue, as well as Venture Capital-backed startups. I’m happy to focus on smaller companies with less funding or no funding since they are the most underserved in this space. I’m continually getting great feedback from founders of small and very early-stage startups who are surprised siliconCFO exists, and it’s very motivating. As my talent pool of CFOs expands, I will have too many CFOs looking for larger companies to work at. About a third of the CFOs in my talent pool has over 20 years of experience, and many of them already have management experience at large companies. I’m not sure what it will be like as I transition to helping larger companies too, but I’m sure we will be able to figure it out as we continue to focus on best serving our customers.
Daso: What are the criteria for you matching part-time CFOs to startups?
Sheldon: It’s a straightforward and fast process. Companies provide us with necessary information about their business, requirements for a CFO, financial management and operations needs, and budget. Within 24 to 48 hours, we can start making introductions to CFOs we matched to that business. It is a white-glove process right now, giving us time and data to develop an accurate matching algorithm. After we make introductions between a startup and CFOs, it’s up to the Founder to complete their vetting process and choose from the matches we made. The Founder and CFOs also discuss the most logical compensation package for the CFO, if it’s hourly, retainer, cash plus stock options, or just straight equity. Bringing a siliconCFO onto the team is meant to be like bringing in a co-founder, so we let the magic happen between Founders and CFOs.
Daso: What drove the decision for you to be a solo founder? What are the advantages of being a solo founder?
Sheldon: Starting as a solo founder was not a choice, but staying one has been an active choice I make on an ongoing basis. I’ve gained enough experience from my previous startups to handle almost everything on my own. The biggest downside so far has been the workload. As siliconCFO started gaining consistent traction, I found myself incredibly busy every day. I am still swamped!
Nevertheless, I am still content to stay a solo founder until I need to invest much more in technology, at which point I would want a partner on the team to focus on that aspect of siliconCFO. It has been advantageous to start as a solo founder because it has allowed me to go at my own pace and explore other paths for my career as a founder. There’s also the distinct advantage of keeping more equity, but the more important aspect is deciding between the company’s potential directions. With a partner on the team, some paths are just not feasible.
Daso: What improvements have you made to your vetting process to source the best CFOs?
Sheldon: Right at the beginning of August, we were able to complete the implementation of our new vetting process for adding CFOs to our talent pool. Previously, we did one round of vetting on paper and went straight to an interview to see if they had what it takes to be a part-time CFO. Now, we’ve added an extra round of vetting before we bring them in for an interview. We had to implement this because we were getting far too many applications from CFOs to the point where we had to pause our vetting process altogether. We can vet far more CFOs and increase the size and breadth of our talent pool at a faster rate. As high as our new process is compared with our old one, I still see many areas for improvement.
I have gained valuable insights from interviewing so many CFOs, learning about their experiences, career paths, successes, failures, and desires. I am already planning for our next vetting process to take more of these insights into account. One of my concepts is implementing a training program to help round-out the skillsets of many finance experts who have nearly everything it takes to be a siliconCFO, but are missing some critical skills required for working with startups. Maybe that is one of the things that will come to fruition if we decide to pursue outside capital.
Daso: What has driven your decision not to raise money to help grow Silicon CFO?
Sheldon: I didn’t decide to raise money, but it’s something that I keep realizing I don’t need to do. I started this business as a consultancy, which is how I could fund myself in the early days while identifying the right problems to focus on solving. It is especially freeing to be completely self-reliant, with no investors to report to. There might be a point soon when I decide to raise money to accelerate the growth of siliconCFO, but it will only be once I have de-risked the business for myself and investors.
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