Miss out on Collision Conference 2022 in Toronto? Here are five key takeaways for CFOs and finance teams.
Collision is one of the world’s biggest tech conferences, packed with celebrated speakers, journalists, startups, investors, and organizations.
This year’s Collision was one of the first major in-person events in Toronto since 2019, with over 35,000 attendees from 130 countries. One of the main themes running through the sessions was economic correction and the importance of getting investment right when it comes to a startup’s finance function and sustainable growth.
Whether you were strapped for time at the conference, or couldn’t make the event this year, you’ll find the greatest hits right here. Read on for the five biggest takeaways for CFOs from Collision 2022.
Venture capital investment is calming down
With the economy slowing down and inflation rising, it is not surprising that venture capital (VC) investment is slowing, specifically in the mid to later stage funding (i.e. Series A, B).
On the other hand, early-stage seed funding is still healthy and actually growing. According to the State of Venture report, global startup funding reached $143.9B USD in Q1’22. That’s a drop of 19%, compared to the record-breaking Q4’21. It’s also worth noting that the number of exits via SPACs and IPOs decreased by 45% in Q1’22.
The bottom line is that last year, valuations and IPOs peaked. As a result of that, the market is now correcting itself and is unlikely to return to the incredible levels we saw in 2021.
Investors want better metrics from startups
Back in 2021, startups were being valued (and invested in) at a hundred times their earnings, making it more of a startup market than it is right now.
Post-correction, investment is getting back to ‘normal’, with investors using a fine-toothed comb to evaluate risk. With that in mind, they’re paying closer attention to things like burn rates, SaaS metrics, and departmental investment, so everything from business plans to growth strategy and finances need to be smart and buttoned up.
VCs want to invest in organizations that show extra care and make smart decisions towards long-term success. That could look like investing in more mature financial management solutions, or making the right finance team hires, for example.
Product and hype alone won’t be enough to win investment and focus has shifted to proven product traction, supported by SaaS metrics and financials. These reports need to be accurate, clear, and updated frequently to be of real value to a potential investor. That’s where cloud accounting software comes in.
Your tech stack is the key to attracting the right talent
Finding the right talent has become increasingly difficult for all organizations, and that includes finance teams. In such a competitive space, the kind of tech companies offer could make or break a hire. Ontario alone saw job postings increase by 64% between 2019 and 2021 alone, and that demand for skilled finance professionals is set to increase.
Controllers and CFOs in particular face a few frustrations when forced to use error-prone tools like spreadsheets or immature accounting software to manage their financial reporting.
Their main issues with these tools? The limitations of subscription billing, revenue recognition, and reporting. These concerns could even be enough for finance leaders to turn down a position if they learnt that a company was using these types of tools.
To some, this might sound a bit extreme. But to others, this hints at the possibility that a company is not making proper investments in their finance department. With that in mind, controllers and CFOs don’t want to be the ones to carry the weight of all the extra hours and stress that go into using technology that doesn’t meet their needs.
The role of the CFO is continuing to evolve
The role of the CFO is evolving to have a bigger impact across different areas of the business. This transformation has been driven by the global financial crisis, rise of big data and the impact of societal trends.
Traditionally, the CFO’s role was about supervising investments, analysing expenses, and tracking regulatory trends. All pretty challenging tasks in themselves; but the world is constantly changing and with it, the role of finance leaders.
CFOs today need knowledge and experience that go beyond the basic finance function to find opportunities for growth and operational excellence across all areas of the business.
Finance leaders are tapping into data for better insights
Collision also showcased the power that data can have across your organization.
Investors are looking for more certainty in their investments. So, they look at CFOs and Controllers as a source of confidence and a window into how the company reduces waste to optimize the business for better results.
These finance leaders act as a barometer for just how secure the company might be in the long term, and how likely it might be weather any economic downturns.
With that in mind, finance departments are moving away from strictly historical reporting to enhanced reporting, using data to help them make better decisions and give the organization stronger strategic direction. This move also helps bridge the gap between startups and investors, which we mentioned earlier.
Better reporting means you’ll be less reactive and more proactive not just as a team, but as an organization. Moving from financial planning and analysis (FP&A) to a more agile, future-focused and data-driven approach allows you to adapt to a wider variety of scenarios and come out stronger on the other side.
If you couldn’t make it to Collision Conference in Toronto this year, or just wanted to know a bit more about the event, we hope these takeaways gave you a taste of what went down. If you’d like to know more about what’s next for CFOs, check out our report on The Redefined CFO, and we’ll see you at next year’s conference!