Startup CFOs Must Balance Rapid Growth Against Short-Term Needs

German cybersecurity startup SoSafe said that 85% of cyber attacks on companies and organizations can be traced back to a human factor. That is why the company chooses to focus on the human aspect of cybersecurity, offering its clients cybersecurity awareness and training.

We sat down to chat with SoSafe’s CFO to get his unique perspective on what it’s like to manage a high-growth startup and effectively harness the winds of change.

Keeping Up With the Pace of Change

Fichtl reflects that being a CFO in a fast growth startup forces him to be adaptable and comfortable with “constant transformation.” As a company scales, so do its business processes, particularly those that concern billing and accounts payable.

Running the finances of a company with a hundred employees is “totally different from running a company with four hundred employees, going to a thousand,” he said.

Fichtl’s role involves juggling all the challenges that come with persisting growth: “additional complexity, change requirements, [and added] compliance burdens.” Fichtl referred to this process as “transformation management.”

A big part of the CFO’s job is bringing data points from different aspects of the company’s finances to report to the board and the CEO. The boards are typically interested in finding out the ROI of their investment and thinking “which areas of the business should I invest in.”

Meanwhile, internal stakeholders expect the CFO to gather budget insights and teeing up various reporting, serving as a consolidator of data from different parts of the company.

It is no surprise that many companies have prioritized syncing their often-disjointed accounts management processes into a unified ecosystem, a trend accelerated by remote work and the need to cut costs.

Scaling Efficiently

Fichtl mentioned that working as a CFO startup on a growth spurt is like “making sure that accounting and other G&A functions are aboard a train that has already left the station.” Growing from hundreds of clients to thousands necessitates scaling the billing solutions to accommodate a larger customer base.

Fichtl makes sure that this is achieved by introducing new software solutions and constantly reviewing processes rather than by employing more people, as that would be unsustainable.

SoSafe’s plans to open new hubs in London, Amsterdam, and Paris aren’t expected to cause much headache for the CFO as regulations are “to some degree standardized” across the EU. Fichtl doesn’t believe the administrative burden of setting up shop in these places to be very high, given that a company can find “the right business partners.”

He thinks that finding the right talent and setting up the proper infrastructure in new markets will be more challenging than adjusting the financial management systems already in place.

Keeping Venture Capital Interested

In sunnier times, the promise of even low-profit one or two percent growth was enough to attract venture capital. Startups in the cybersecurity space have attracted more than $29 billion in venture capital and private equity investments in 2021.

As central banks tighten monetary policy and interest rates climb, venture capitalists’ appetite for large funding rounds has cooled. Though Fichtl hasn’t seen a scarcity of VC funding in the cybersecurity space, he has noticed that investors are becoming more focused on profitability.

The cybersecurity industry remains highly attractive to investors since it’s a high priority area for companies across the board. Fichtl said that SoSafe has yet to face difficulties with receivables as cybersecurity is “front of mind” for customers.

EU regulations help out, as they mandate companies to maintain a high level of data security and favor cybersecurity service providers that are close to home. Fichtl considers them “a partner of sorts” as they “create a lot of demand.”

There is however an awareness that the industry is highly competitive, which means that the high pace of growth will not be around forever.