Having labored with each startups and MNC’s, Moglix CFO Rahul Goel believes that the position of a CFO goes past finance in relation to startups
As a part of Inc42’s CFOs In Tech Sequence, which is powered by HSBC, we spoke to Goel concerning the present panorama of tech startups and the journey of getting listed
Startup ought to all the time have a finance man from day one who can act as a sounding board and maintain the mirror to the corporate, believes Goel
The final decade has really been the golden period for digital transformation. From utilizing internet companies for chatting and communication to fixing main hurdles, companies have embraced expertise, automation and digital instruments in a serious means all through the previous 10 years. With the pandemic in 2020, issues got here to a head. Pressured to undertake digital instruments in areas to date unpenetrated by tech, B2B merchandise have come to the fore. Many B2B marketplaces corresponding to IndiaMART, Bizongo, Udaan, Moglix, Power2SME amongst others have emerged because the trend-setters within the new market.
And with development and scale comes the accountability of managing cash properly and spending it in the fitting areas to earn dividends. The B2B tech market is exclusive in that monetary and even non-financial selections usually have a cascading influence on the ultimate value of the product, which makes it trickier to promote to clients who have already got a low propensity to pay. The likes of Moglix and different B2B startups additionally need to consider the price of compliance, provide chain and different uncontrollables.
Based in 2015, Moglix is an ecommerce market for industrial provides, instruments, equipment, gear, security and safety provides and electricals. With adoption rising at a quick clip over the previous few months, the corporate realised it’s important to have somebody deal with the funds, budgets, compliance.
Rahul Goel, who has labored with startups corresponding to Shopclues and MNCs corresponding to Nokia, Motorola, joined Moglix on its development trajectory in 2019 because the VP of finance. Below his stewardship, the Noida-based startup has grown tremendously prior to now 12-18 months and has additionally attracted funding from the likes of Tiger International and Sequoia Capital, two of the most important buyers in India.
When requested to level out the highlights of his tenure, Goel directs us to the size that the corporate has seen. “The corporate has grown 4 to 5 instances when it comes to high line, we now work with 5 Lakh+ SMEs, 16,000 suppliers. We’ve 35 areas in India, Singapore, UK and Center East and we’ve got expanded our world sourcing portfolio to a really massive extent”.
Agility In The Finance World: The Huge Problem For CFOs
“After we’re speaking concerning the startup world, we are able to’t create an awesome firm until the founder’s imaginative and prescient and investor’s visions are aligned.”
For Goel, at no matter stage a startup hires a CFO, they should be agile sufficient to adapt to the fast-pace tech world, which has a number of stakeholders and shifting cogs. It’s crucial to know these varied shifting components to see which can have the fitting influence. “CFO ought to be intently concerned within the enterprise modeling and enterprise development blueprint to make sure the funds are working to ensure that audacious objectives are taking place and we’re in a position to obtain these objectives. It turns into very tough in any other case and finance will play a catch up sport, significantly in the event you’re not watching it intently.”
Goel states that it’s essential for any firm to rent a CFO proper from the start as a way to achieve success. One must be extra agile, quick and progressive as a way to attain the enterprise necessities and in relation to tech startups, CFOs should be dynamic. Stating his personal instance, he explains how necessary it’s in a tech startup to deal with key efficiency indicators corresponding to variety of guests, converts and naturally, the income. That is indicative of economic efficiency in some ways too, he reckons, and whereas some metrics might in a roundabout way influence the underside line, CFOs additionally must know which of them are worthy of pursuing and that are merely self-importance metrics.
Going Past The Finance Area
A finance skilled for over twenty years, the Moglix CFO believes that two main elements which might be usually ignored by most monetary heads at corporations are development and governance which play an necessary position within the journey. He acknowledged that Indian corporations have but to know the enterprise mannequin and effectivity of tech startups in order that they are often evaluated appropriately.
On condition that tech startups must have cross-functional leaders, the most important problem for a CFO is balancing pace and agility of the finance operations with the opposite components of the enterprise from product to advertising. “Within the early stage of that product, the assets is likely to be restricted however the pace at which the corporate needs to run is likely to be very quick,” Goel added, highlighting the necessity for CFOs to study different domains to react in a fast method.
Talking concerning the journey of getting listed, which is taken into account the endgame for a lot of startups, Goel mentioned it’s essential to have the fitting accomplice from each the investor and the bankers’ facet. This implies guaranteeing the corporate will get audited quarterly, reaching out to the fitting set of buyers whereas specializing in the corporate’s place out there and its varied finance operations.
Leveraging Expertise For Effectivity
One other key problem revolves round hiring and bringing on leaders at totally different roles. Particularly with tech startups, it’s important to have individuals who perceive the enterprise mannequin, even when their core competency is some place else. The place conventional IT corporations include sure constructions and setups already in place, startups require people who find themselves versatile and don’t draw back from placing within the additional efforts. The CFO is not any exception.
Goel defined it’s essential for an excellent CFO to know the core enterprise mannequin and the expertise. It is part of his job to maintain an in depth eye on the expansion trajectory of the startup, even at an early stage within the life cycle. After all, one of the crucial essential duties for a CFO is fundraising. Goel advised us a new-age CFO must assume accountability for the whole fundraising cycle — from the timing of the fundraise to making a wholesome monetary image to assembly with advisors to figuring out the fitting strategic companions and attracting the fitting set of buyers.
After all, as of late CFOs usually are not anticipated to do all this by themselves. With automation and SaaS instruments additionally fixing a number of finance operations inefficiency, usually CFOs don’t need to manually guarantee compliance or the fitting processes. Reasonably than fearing being changed by software program, Goel encourages using SaaS instruments.
“These are the instances for the finance workforce and CFO to take a look at extra strategic worth including issues fairly than worrying about compliance. These instruments truly assist carry up the time from each day repetitive actions.”
Holding A Mirror To The Firm
Communication is the important thing ingredient of any profitable firm and to maximise the success, it’s essential for a CFO to point out the mirror to the corporate it doesn’t matter what, the Moglix CFO believes. This implies ethics should come first for a finance skilled. “Whether or not it’s a standard or a startup doesn’t matter, your job is to inform the reality. In any other case, in the event you begin cooking up numbers, as CFO, you’ll fail in all features of your life.”
Weighing in his expertise, Goel additionally spoke concerning the significance of the board for governance in case of contradictions and disputes between founders and buyers and the way a CFO ought to ideally cope with it.
“Traders, board, clients, suppliers, our workforce – all share steering and inputs from their vantage factors. The founder has to synthesize these inputs and take selections in the most effective curiosity of the stakeholders, ecosystem and group. The target of a CFO ought to be ideally to handle all stakeholders, which incorporates buyers, CEO and the board,” Goel emphasised.