👋🏾 Hi friends!

I’ve been out in Italy melting in the intense heat and humidity that has every space feel like an oven.

But whilst I’ve been here, I’ve been paying attention to what’s been happening in the UK and, whilst I shouldn’t have to say this, what’s going on is reprihensible. Whichever side of the political spectrum and whatever the reasons, hatred, violence and destruction are simply not the solution – especially in 2024 Britain.

Here’s what I wrote on LinkedIn

With further protests planned for London and elsewhere, I hope that if you and your families are in any of these areas, whatever your creed or colour, that you keep safe and let’s hope this devestation to communities across the UK comes to an end – and quickly.

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

In this weeks Off Balance:

🎙️ Fred Hoch, co-founder of TechNexus Venture Collective on Nothing Ventured
🚫 What not to do when you’re hiring in startup finance

𝗠𝗮𝗸𝗶𝗻𝗴 𝗰𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝘃𝗲𝗻𝘁𝘂𝗿𝗶𝗻𝗴 𝗹𝗲𝘀𝘀 𝗰𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲

On our most recent episode of Nothing Ventured, I talked to Fred Hoch, co-founder and general partner at TechNexus Venture Collaborative, a Chicago-based venture collaborative that bridges the gap between startups and Fortune 100/500 corporations.

Fred’s career has taken him across the globe and back and with over 30 years of experience, he’s been at the forefront of the tech industry, from the early days of the internet to the rise of SaaS.

At TechNexus, Fred has orchestrated 270 investments for major corporations, with an impressive 85% survival rate. As well as his work at TechNexus, he currently sits on the boards of numerous startups and the UIC School of Engineering, ChicagoNEXT, and SmartBet Charities.

Top Takeaways:

➡️ 𝗜𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 𝗕𝗲𝘆𝗼𝗻𝗱 𝘁𝗵𝗲 𝗖𝗵𝗲𝗰𝗸: Fred emphasised the importance of corporations viewing startups as strategic investments rather than just financial ones. By building relationships and collaboration with startups, corporations can drive innovation and future growth in products and services.

➡️ 𝗘𝗺𝗯𝗿𝗮𝗰𝗶𝗻𝗴 𝗘𝘅𝘁𝗲𝗿𝗻𝗮𝗹 𝗥&𝗗: Fred highlighted the need for corporations to engage in external venturing to stay ahead in the rapidly changing market. By partnering with startups and investing in a diverse range of ventures, corporations can tap into new technologies and ideas that can drive their future success.

➡️ 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀 𝗢𝘃𝗲𝗿 𝗧𝗵𝗿𝗲𝗮𝘁𝘀: Fred shared a compelling example of how a recreational boatmaker shifted their perspective on electrification from a threat to an opportunity. By investing in innovative electric motors, the company transformed its product portfolio and embraced the future of boating technology.

They also talked about:

🏘️ Building communities and driving the evolution of Software as a Service.
🎭 Moving from the theatre of corporate innovation to investing beyond the cheque.
💸 Breaking out of the corporation to bring in entrepreneurial spirit.
🧮 Corporations that focus too much on ROI of corporate venturing are missing a trick.
🧾 How CFOs are the wrong people to champion innovation within a corporation.
🤑 VC has been broken for 40 years, is it heading back on track?
🔮 Ventures are opportunities, not threats for large corporations.
🤗 How to get corporations to understand the technology, see the future and embrace the technology.
？Can you actually be contrarian in todays world?

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Now let’s get into it.

Off Balance

Not to be <that guy> again, but can we take a moment to talk about how f*cked up finance “hiring” is in early stage venture?

Obviously I talk to ALOT of VC backed startups and naturally this is going to sound a bit self serving, after all EmergeOne provides fractional CFO support to VC backed startups from seed to series B.

What not to do when making your first finance hires in a startup

1. Hiring a full time CFO too early – unless you have sufficient capital to manage, this is a waste of resource.

2. Hiring a CFO (fractional or full time) too late – there is an inflection point, after you’ve raised a tonne of capital or have strong revenues where it’s critical.

3. Hiring too junior and calling them a CFO – you don’t become a CFO through qualifications, you do through experience. Junior finance heads may plug some gaps, but don’t expect strategic insight.

4. Doing it yourself – Yes, Xero exists and, yes it’s easy to use. It’s also easy to use incorrectly and your books of account are only a small part of your finance stack.

5. Only going operational – indexing towards only hiring in someone to fix the operational stack (invoice flows, revenue accounting, spend management etc) doesn’t work for long, it’s as important – at the right stage – to have the strategic insight a CFO can provide.

6. Hiring in a big 4 or corporate background ‘heavy hitter’ – most of these folk will not have worked in a cash strapped, resource constrained environment, they are used to having machines behind them and more often than not will flounder.

7. Hiring someone who has never worked with VC backed companies – there are lots of folk out there who are great working with ‘trad’ businesses, but who don’t know the complexities that arise working with an institutionally funded early stage business.

8. Searching for unicorns – I can categorically say that no CFO is going to do your bookkeeping (at least for any length of time), trying to find someone who will ‘do it all’ is a false economy and you will end up with either your finance ops or your strategic finance suffering.

9. Not bringing in anyone operational at all – strategic finance can only add value when the basic hygiene of your finances is in place. You can’t do strategy if the downstream information is broken.

10. Assuming there is only one way to do finance – there is no rinse and repeat playbook for building a finance team, what worked in company x won’t necessarily work in company y. What works in a fintech doesn’t necessarily translate to what works in a marketplace.

What ! see working well once a company has raised enough capital or is printing enough revenue to warrant it is to bring in a fractional CFO who can help figure out how to structure your strategic and operational finance stack the right way, first time.

As always, my office hours are open, if you’d like to chat about this or anything else, just grab some time 😊.

I hope you found Off Balance #47 useful. As always, I’d love to get your feedback and understand the sort of topics you would love to hear about.

Just hit reply to this mail or drop me a line at hello@emergeone.co.uk and let me know 😊

🚀And that’s a wrap for this edition of Off Balance – I’d appreciate your feedback so just reply to this email if you’ve got something you’d like to say.

📨 And if you think someone else might love this, please forward it on to them,

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish