Startup CEOs have several challenges, most of which filter up to one main objective: Grow the business.

As a startup CEO entering the pivotal first years of business, the evolving financial landscape poses new challenges. These often require strategic decisions for sustained growth. One of those strategic decisions that occurs right away includes hiring the right Chief Financial Officer to join the financial team.

Not only will this partner act as the linchpin for navigating new financial terrains, but hiring a CFO is often a startup’s first time adding a senior non-founder to the leadership team, as well. With such high stakes, hiring a CFO is not as simple as perusing LinkedIn profiles for people with expertise in accounting. Rather, CEOs should consider the below steps as a CFO Hiring Guide to help them navigate the job of hiring a modern CFO. That’s one who’s ready for all the new responsibilities that the role requires, can help grow revenue with the c-suite, and is well-suited to the whirlwind that is the startup environment.

So, how do you hire a good CFO? Read on. 

Understand what to look for in a modern CFO

Before any CEO can hire the best CFO for their company, they must first understand how the role has changed in recent years. According to a 2023 CFO Outlook survey[1], 84% of CFOs reported that they would be more involved in tech investments, while analyzing data (13%) and understanding the company’s business (14%) were listed almost as highly in terms of what managers said their CFOs were best at when compared to the traditional talents of managing the finance team (15%) and financing (19%).

In other words, as the CFO role continues to expand into areas beyond the traditional finance roles of financial planning, it will be essential that CEOs look for candidates that exhibit these additional skills and leadership traits.

Get crystal clear on how the CFO role fits in with the startup’s vision

Hiring a CFO for a startup will be tricky if the company is still fine-tuning its overall vision and placement within the market. Every element of a startup is being built from the ground up. If the framework isn’t already established as to how the CFO will play a role in that decision-making — Will the CFO be part of the strategy team? If an investor has a financial question, should they approach the CFO? Will the CFO be responsible for monitoring sales and setting goals for VP of sales? — it will be difficult for everyone involved to hit the ground running. While you’re busy nailing down the CFO role, be sure to take salary into consideration, as well. The average annual salary for a startup CFO is around $151,300 per year, according to data from ZipRecruiter[2]. Figuring out the right salary for the role, along with the actual responsibilities, is essential.

Ace the interview by asking key questions that are pivotal to any startup role

With a clear understanding of where the CFO role is heading in general, as well as how that fits in with the overall strategic goals of the company, CEOs can move onto the interview phase. Besides the obvious — having in-depth conversations with prior employees and spending time discussing overall shared values, growth plan objectives and commitment — asking some pointed questions will be the key to finding the right person for the role.

Finding the right applicants on paper is a good start, but consider the following when it comes time to sit down with CFO candidates:

• Ask for examples that show a mastering in the art of flexibility. Startups aren’t for the faint of heart. There’s something to said for an experienced CFO, but there’s also a lot to be said for the CFO who can bring a certain level of scrappiness to the financial operations. For a startup, flexibility and innovative thinking are required for everything from securing funding to establishing the financial infrastructure of the company. A CFO who has remained at the same job at an established institution for a decade may not have the wherewithal to think outside of the box in a fast-paced environment where split-second decisions can mean the difference between success and failure. Ask for some examples of when your candidates have done this to see if they’re up to the task.
• Ask how data has played a role in their previous jobs. For data to make a real impact on a company, employees need to not only understand how to use theirs, but they will have to consider data technology a serious investment, as well. In fact, 79.8% of executives say[3] that cultural impediments — and not the technology itself — was the greatest barrier to becoming a data-driven company. Finding a CFO who understands and takes financial data seriously will be the easiest way to ensure that a cultural attitude of “data-first” starts from the top down.
• Ask for times when being a team player helped them succeed. At the heart of every CFO role is the ability to be a leader who also works well with others. A CFO who believes they have nothing to learn from others and doesn’t need input from other departments won’t play well in a startup setting where everyone is expected to contribute. After a candidate has finished touting the accolades that make them qualified on their own merit, be sure to ask for specific examples of times they took advice from the team to grow the business or make a big decision. Equally as important are examples of times they made mistakes, and how they dealt with the outcomes.

One thing that’s true for all companies, whether it’s a startup or an established institution, is that concentrating on leadership and vision for employees can make or break a business. Finding the right CFO for a startup requires looking for that delicate balance of smarts, dedication and training combined with the soft skills, like resiliency and critical thinking, that differentiate a good employee from a leader.

The startup journey can also be unpredictable. That makes it crucial to find someone who is both agile and stable. These characteristics will be the assets that help propel the people they are leading, as well as upper management, investors, strategic partners and potential buyers. By using the steps above, CEOs can ensure that they’re on the right track for picking their startup CFO, one that will lead with talent, understanding and the essential ability to keep cash flow moving in the right direction.

If you’re a startup interested in more ways that Valley can help with your banking solutions, check out our specialized banking solutions for businesses here.

This article is intended for educational purposes only. Statements of fact and opinions expressed are solely of the writer and, unless expressly stated to the contrary, are not the opinion or position of Valley Bank. Additional terms and conditions apply for certain products and services mentioned. You should consult your own tax, legal and accounting advisors before engaging in any transaction.