What happens when you don’t hire a finance executive for your startup
No VC will ever fund your company if your finances and compliance are a mess. This VC tells you why you need to get your house in order from the beginning.
- If you are a typical entrepreneur, you've probably ignored the finance, legal and HR areas, and most often are likely to be clueless about their role in the larger scheme of things.
- I've unfortunately seen the cycle repeat umpteen times in startups - and nobody will forgive poor accounting and compliance practices, regardless of the great growth numbers or excellent product and team.
- In the early stages, most entrepreneurs tend to look at finance as a waste of money - and aim to spend the minimum on this front, sometimes as low as $500 per month (Rs 35,000) to get the lowest-cost bookkeeper or auditor they can versus a more competent one that may cost you say $1,500 per month (Rs one lakh).Let me show some simple arithmetic to tell you how much this costs you:● Assume you start a company and raise an angel round of $500,000 (Rs 3.5 crore).
- As a frenzied startup with limited runway you keep going from customer to customer and signing them up - and keep in your mind a recording of the incremental revenue each customer brings.
- At all stages of the company the finance, compliance functions need to be handled by someone competent and someone who is on top of things.