Founders and CEO’s building a business are typically caught short on time for almost everything – and particularly when a capital raise gets under way, it’s one more thing that demands attention when your day simply doesn’t have enough hours. This is even more acute when you hit expansion stage, and like most things if you share the burden you can achieve more with the same number of hours – and outsourcing the capital-raise efforts is a logical part of the process. The question is who to outsource to.
By outsourcing you can get support on the activities where you have most need, and better yet you can increase access to broader networks, without sacrificing the quality of expertise – and when it comes to the fundraising process, it makes sense for this to be overseen by an investor with a keen interest in seeing your business succeed. Inherent in the process of expanding your capital base a CEO can always benefit from a broader base of financial guidance, but might struggle (or simply not find it necessary) to justify full-time CFO support in-house, and particularly on a limited budget. That’s where leveraging your investor base, with a focus on your more industry-experienced investors, can be a source of (and access to) innovative solutions and sources of capital.
Consider this: hiring a full-time CFO in the UK can cost upwards of £120,000 annually. Having an investor or board member provide you with a substantial portion of those efforts might cost just 10% of that. That’s a nice buffer for your runway.
As the business grows, financial requirements become more complex. Having someone on your cap table who can actively support those future rounds is a built-in hedge against further strain on your other priorities as CEO. An active investor’s involvement can enhance credibility with other potential investors, and can accelerate the process of securing funding through each phase of growth. Ultimately the backing of an existing investor, both for the business itself and for advocating further investment into your ambition and your growth prospects, can provide much-needed reassurance to those considering a financial commitment, and can open doors to more bright minds that will add value as the business scales.
As a not-insignificant aside, it stands (perhaps obviously) that having your investors involved in the ongoing development of your capital stack can also contribute to building a strong financial foundation. This is a foundation for long-term success, putting a set of experienced minds to work for continually reviewing whether your financial practices are optimal – both now and for achieving the type of exit you have in mind. If a CEO takes those steps early on in the approach to corporate planning, the headlights can shine all the more brightly on the road ahead..
