Does your startup need a financial cofounder?
Many business schools tell us that having a balanced mix of professional profiles in a startup team is key to maximize your chances of success.
This is true. However, you need to know what skills does your startup need in order to validate a value proposition. Since starting up nowadays involves development of some kind, a CTO is key.
You also need to know how you will sell your product…
Sayings such as “my product/service is so good that it will sell by itself” are the first indicator that you don’t know how to sell. No sales, no business. That’s why the other key figure is someone who can sell to the client, someone who gets people to your site and understands how to drive them towards the cart checkout. I am talking about the CMO or the Growth Hacker,depending on the business.
So far you can make things and sell them, but the third key role in a startup is the BUSINESS one. This figure tends to be the leader, the one with the vision, the one who has a clear idea on how to turn the concept into a profitable enterprise, the one who can manage all the resources (specially the time) and make things happen.
Is this business entrepreneur the finance person? Not necessarily. It always comes in handy to have someone who can deal with reports, taxes, banking and other administrative stuff, because these are things that assure the survival of a business that sells. Again, no sales, no business. A startup needs to find at least one revenue source with a lifetime value higher than the acquisition costs, with enough market size and market share.
Finance person, do you need one?
When a startup has validated its business model and can then start to think like a company, is in this moment when it is key to have a finance person: someone who can deal with the administrative tasks, give business performance visibility to managers and provide trustability to shareholders.Nowadays, finding a qualified person for this tasks is not as hard as looking after the three entrepreneurial types mentioned above: the CTO, the CMO / Growth Hacker and the Business/Product oriented person.
Therefore, a CFO is not essential on the first stages of a startup, although it may be convenient, of course.
In this post, I have indirectly stated that the ideal number of entrepreneurs is three. They also need to complement one another, not clones with repeated profiles. Why three?
- To avoid ties in decision making.
- To offer different points of view.
- It allows entrepreneurs to meet and work easily with each other.
- Entrepreneurs can keep a big stake in the business, so that they really feel owners.
- Startups need entrepreneurs rather than employees to be able to go the extra mile.