Overcoming COVID-19: What finance leaders at recently-funded tech startups have learned so far
There’s no doubt that 2020 has been a testing year for everyone. According to data from PwC, 53 percent of CFOs expect a decrease in revenue and/or profits of up to 25 percent as a direct result of COVID-19. For many tech startups, that’s the difference between staying alive and closing for good.
With such uncertainty in the air, leadership teams have had to act fast and rethink their entire strategy.
At Procurify, we spoke with 12 CFOs of recently-funded technology startups to hear what they had to say about the impact of COVID-19 on their business, and how they’re intending to re-strategize in response to the pandemic.
Here are three key takeaways.
1. People remain at the heart of business growth
Although layoffs have been inevitable (a survey from the Council of Canadian Innovators found an 8.5 percent workforce decrease across the tech ecosystem), many financial leaders re-allocated resources and reinvested in people to both preserve talent and maximize operational efficiency.
"We re-allocated our people to projects that we needed to focus on," explains Jim Kelliher, CFO at Drift, a Series C funded marketing automation platform named one of Forbes’ most promising AI companies. "We were able to adjust our workforce without needing to reduce our workforce. We took our recruiting team and repositioned them into our business development and sales area where they started recruiting customers."
Kelliher isn’t the only tech CFO to step outside of their job description and focus on employee retention and productivity. Drop -- a Toronto-based mobile rewards platform who raised $44 million in their Series B round in 2019 -- onboarded a new CFO, Shouvik Roy, in the middle of the pandemic. One of the first things Roy did was reinvest savings from fixed costs like office spaces back into the team:
"With our savings on office costs, we redeployed them back to the employees because we wanted to make sure that they were comfortable in their homes. We made sure they had the right chairs and desks, and we knew their internet and phone bills were probably higher than normal. That’s how we are continuing to invest in our people."
2. Automated technologies are the cornerstone of successful remote work
The adaptability of a scaling technology startup was put to the test this year as remote working became a very real way of life. For us, we quickly deployed the necessary technologies to ensure the transition to remote work didn’t impact our productivity.
But for those startups with employees working far and wide and who don’t have the right processes in place, transparency over things like business operations and spending were the first to go.
"Finance teams historically have been slower on the uptake in tech," explains Bevan Van Der Berg, CFO at Procurify. "More automation is now required in our remote-working world, and finance teams need tools that offer easier interaction and better communication with each other."
While marketing and sales teams can decentralize their operations easily, finance teams are typically slower to digitize, and legacy systems and paper-based processes left many CFOs with little choice but to find a way to innovate, and fast.
But, even with the right tools at your disposal, monitoring things like business spending is no easy feat if teams aren’t transparent in their communication.
3. Open communication is vital to survival
For some CFOs, overcommunication has been the answer to managing such drastic workplace change:
According to Kingsley Chan, Director of Finance at Vancouver-based Finn AI, his company must now "...do like 120 percent of the communication that we were doing before. Overcommunication is what we’ve been utilizing for change management."
But, while 68 percent of leaders believe that their communications with employees have improved during the crisis, not all CFOs are on the same page.
"With virtual calls, you can easily click off and lose your attention to this other shiny object on your screen," explains Evan Wells, VP Business Operations and Financial Services at Jirav. "It’s hard to tell if somebody is looking directly at you on the Zoom call. Interpersonal communication becomes lost. And so I think we'll be contending with this issue for a long time."
The challenge, then, is to introduce an array of multi-channel tools that maintain asynchronous and synchronous lines of communication and promote positive company culture, all without impeding employee productivity.
The key to successful change lies in adaptability
There’s no arguing that 2020 has changed how we work forever. And for CFOs of recently-funded technology startups, it has asked some demanding questions:
- Do we diversify our offerings to counter revenue drops?
- How do we strategically restructure our organization to maintain productivity and avoid mass layoffs?
- How do we maintain open communication as a remote-working company?
- What automated technologies are required to ensure continuous growth?
Fundamentally, however, COVID-19 has asked one question, and one question only, of tech CFOs: How quickly and positively can we adapt to change so that we can continue to scale?
As I explain in our recently-launched report, The Future of the CFO:
Change is inevitable. Change must not be viewed as a threat, but rather as an opportunity. CFOs who succeed in the coming months and years will be those who are able to adapt and continue innovating. Every scary and difficult challenge builds us up. As we take more risks and go through more failures, we become more powerful and less afraid, because we know what it's like to fail. That's what real growth is.
To read the full report, visit The Future of the CFO.
Aman Mann is the CEO and co-founder of Procurify, a SaaS startup based in Vancouver, Canada. Procurify is a spend management software platform that helps organizations proactively manage spend to drive operational efficiencies and business growth. Companies can request, approve, and track the resources they need to move the business forward through real-time data, streamlined procurement workflows, and valuable spend insights. Procurify has managed over $7 billion dollars of organizational spend around the world and integrates with major ERP accounting systems such as NetSuite and QuickBooks Online.