Dear SaaStr: When Should I Hire a CFO?
I think at a minimum you should have a real experienced finance lead at $2m ARR, a real VP Finance once you raise $20m, and a CFO once you are at $20m+ ARR
— Jason ✨BeKind✨ Lemkin #ДобісаПутіна (@jasonlk) April 12, 2022
Most startups just wait way too long to get finance right:
- They wait too long to get collections right, and have to write off a lot of bookings.
- They wait too long to get ARR measured right, and have to restate revenue.
- They wait too long to measure churn properly, and measure it wrong.
- Etc. etc.
So what are some rough rules? This is probably close enough:
- At $2m ARR, you start to get too many things wrong for it to be 100% outsourced. Most outsourced finance resources aren’t great at collections, and aren’t perfect at SaaS revenue recognition. Hiring a real controller here will often pay for itself, especially on collections.
- At $20m in VC money raised, the excuses sort of end for the metrics being wrong. You need someone experienced to own this all full-time. Ideally earlier, but at least by then.
- At $20m in ARR, it’s not too early for a CFO. That starts to put all the systems and processes in place you need to scale to $40m, $80m, and more ARR. Yes, maybe a CFO you hire at this stage won’t be the CFO that takes you public. But that’s OK. That’s a ways off.
A related deep dive here: