Understanding finance for startups with KPMG High Growth Ventures

KPMG HGV Startup Finance 101 

If you don't have a finance background, it can be hard to understand what your finance function should look like as your startup grows. It’s even more challenging when you are growing fast - and when investors are scrutinising financial reporting and forecasts more than ever before.

Which metrics should you report on? Do you need a bookkeeper, a CFO, or someone in between? How do you demonstrate the pathway to profitability that VCs want to see? And how do you set up robust processes in place so you have your finger on the pulse of the business without spending hours poring over reports?

In this KPMG High Growth Ventures Lunch & Learn, Leanne Hegarty, Partner at KPMG and Mac Christopherson from MAD Ventures discussed the benefits of getting your finance function set up well from the get-go. This session will explore:

• What stage should you start thinking about reviewing and maturing your finance function
• How a strong finance function can support future capital raise efforts
• How to know if you’ve outgrown your current bookkeeper
• The monthly reporting expectations of your board and investors

Check out the recording below:

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From the VC perspective: 3 things startups need to know about their finances 

Founders are juggling a million competing priorities at the same time, but according to Mac, there are three things that should be at the top of every founder’s priority list:

1. Understanding & closely managing your cashflow. It sounds like a straightforward task, but you’ll be surprised how many founders overlook this as the pressure mounts. As a founder, you should know your burn rate and the amount of runway you have, and monitor your spending so you on't (unexpectedly) run out of cash.
2. Know & live your growth levers. Get a clear understanding of the key metrics that drive the growth of your business, and how these link with one-another.
3. Have a capital strategy. Plan a path for your long term capital requirements that optimises the speed of execution/milestone achievement, capital efficiency and your dilution. This will allow you to go into each raise prepared with the documentation that investors want to see.

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From the CFO perspective: 8 things startups should know about their finances: 

As a Partner at KPMG, Leanne has worked with a number of startups and scale-ups at all stages of the growth journey. She’s seen it all - and has a few tips for founders looking to build an efficient and profitable company.

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1. It is important to not only know your numbers, but you need to understand them.  You need to be able to talk about them, what they mean and their sensitivity to movement in your levers and drivers.
2. Understand your business, not just your product.  Often founders are technical experts, but investors also want to know that you can operate a business.
3. Get clear on your cashflow and projected cashflow.  This can’t be done in isolation of your P&L and balance sheet.  They are all inter-related and must be considered (and presented) together.
4. Let people do what they are good at.  Think about the opportunity cost of having people do things that (1) they aren’t really interested in, or (2) they are not that good at.  This imposes risk on your business, demotivates people and incurs a loss when people aren’t doing what they are employed to do and excel at.  Outsource functions where you can.
5. Growth is important, but not at any cost.  You must demonstrate how you are going to grow efficiently – and when you are going to realise profits.  You must understand your unit economics.
6. Know the metrics that investors are looking for. This includes metrics like your burn rate, revenue growth, gross operating margin, and revenue per employee.
7. Don’t oversell.  Be realistic and over perform.
8. If you don’t have good financial literacy, engage people that will take you up the curve and educate you.

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 If you’re looking to elevate your startup finances to the level that investors and your board expect, get in touch with KPMG High Growth Ventures. This dedicated team works with founders to build sustainable, scalable startups through specialised services that are designed and priced for startups. 

Learn more about KPMG High Growth Ventures here.

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About our subject matter specialists

Leanne Hegarty - Partner, KPMG Australia

Leanne is a Partner within Business Tax & Advisory and heads up our Outsourced Finance and Bookkeeping Support team. Leanne was previously a Finance Director for a large US consumer food brand and has 30 years’ experience working with businesses at all stages of growth.

Her chartered, commercial, and personal business experiences have enabled her to provide significantly broader insight and perspective to clients, the likes of which include Anytime Fitness, Krispy Kreme, and numerous SAAS and consumer product business. Most notably, she’s passionate about working with founders, providing strategic finance function support as they scale their startup, manage stakeholders and investors, prepare themselves for capital raising, or expand into new markets and territories.

Mac Christopherson - Director, MAD Ventures

Over the last two decades, Mac has built high growth ventures in many different markets. In roles as a Founder, Commercial Director, Country Manager, CFO and Advisor; Mac has driven growth in ventures from idea to scale. He has identified, negotiated and executed multiple strategic acquisitions & strategic partnerships and led several multi-million dollar capital raising rounds. Mac has a unique combination of strategic financial and creative entrepreneurial insight that is invaluable for high growth ventures with dreams to change the world.

About KPMG High Growth Ventures

Working with founders to build sustainable, scalable startups.

We connect founders and their teams to the services they need to grow sustainably, saving them both time and money. ​​​​​​​

We offer a range of specialised services for startups at price points tailored to different stages of growth, including Outsourced CFO, which brings sophisticated financial planning capabilities to startups at a fraction of the usual cost. We also assist startups with their ESG and ESOPs as well as offering other services like bookkeeping, tax structuring, and government incentive support.

Over the past five years, we have helped over 200 startups, from Canva and Nexba to emerging leading startups like Great Wrap, Sundrive Solar, and Fat Zebra. We are an active member of the startup scene, partnering with organisations such as Innovation Bay, Upside and Climate Salad to provide ongoing support for founders. In tandem, our team works with VCs and ecosystem partners to run founder education programs, networking events and Q&A sessions.

Want to find out more? Hop on our website or get in touch with us at highgrowthventures@kpmg.com.au