28. CFO Stories - Life as a Portfolio CFO for Start-ups with Aarish Shah

28. CFO Stories - Life as a Portfolio CFO for Start-ups with Aarish Shah

Hannah Munro: 0:48 

Hello everybody and welcome to this episode of CFO 4.0. As usual I'm your host Hannah Munro and today we're going to be talking about life as a portfolio FD. So, with me today is Arish Shah. Welcome Arish, lovely to have you on the show. 

Aarish Shah: 1:02 

Lovely to be here, thank you for having. 

Hannah Munro: 1:04 

1. Great to have you. So, tell us a little bit about your background Arish. Where did you start and how did you get into being a portfolio CFO?

Aarish Shah: 1:12 

Sure. I mean, you know, it's a bit of a long story, but I'll try and can it a little bit. So, I came up through sort of PricewaterhouseBPO, Nortel Networks and Deutsche Bank where I qualified. So, I'm a SEMA holder, currently an FCMA, I guess. Then I sort of went off and spent 10 years overseas running a group of manufacturing and trading businesses alongside a property portfolio. But I was in an environment where you had to wear kind of every hat. It was a place that was very difficult to bring in. external team members or team members in general. You had to kind of import from overseas and the whole process was quite cumbersome. So, I ended up sort of really taking on the CFO mantle there as much as anything else. And then I came back to the UK in 2015. And had a bunch of coffees and chats and ended up as founding CFO in an EdTech venture, which was a joint venture between Eaton College and Founders Factory, which is Brent Hoberman's accelerator out in Kensington. So, that was my kind of first taste of really being fully within a CFO role, I guess. And that was wonderful because, you know, I got exposed to all sorts of things within technology and startups. And, you know, this was a China facing business, which, you gave me some really interesting things to think about. And I realized sort of a couple of years into that that CFOs in early stage and growth ventures are really essential but they're not essential on a full-time basis. And I really thought that there was kind of a gap in the market. I hadn't really done much research, I think, but I really thought there was a gap in the market for that kind of portfolio CFO role within early stage and growth ventures. Fairly established within the private equity world, you have a lot of parachute CFOs going into businesses. But I thought, let's give it a shot. I have a youngish family, but I'm not that young myself. myself anymore. And I thought this would be a great way to kind of balance my life out doing something I enjoy doing with companies I enjoy working with but equally having a bit of flexibility. So, that's kind of how I started the journey as a portfolio CFO. So, really from 2017 onwards, that's what I've been doing. I mean, things have grown since then, but definitely that was kind of the anchor and the core of the experience from then on. 

Hannah Munro: 3:38 

And what does life as a portfolio mean? FD or CFO look like? How many clients are you working with at any one time? 

Aarish Shah: 3:47 

Yeah, look, that's a really great question because It's one of those how long is a piece of string questions, right? There are some portfolio CFOs or FDs that I know that want to fill up their time and have four- or five-days’ worth of work. So, really, they're looking at this as a way of getting a kind of higher base rate, if you like, and maximizing their time. Others, on the other hand, kind of look at trying to do a couple of days a week or three days a week and have a couple of days additional balance. So, it really depends on where you are and what you're looking for. Obviously, there's a huge amount of feast and famine kind of element to this. So, working out how much capacity you have and how much capacity you can give to a client is really critical. I tend to land, and I'll talk about this later for sure, but I tend to land in this place where I think about it less in terms of days, but more in terms of what I can offer the business. Because I think for great CFOs, and I don't necessarily count myself as a great CFO, but for great CFOs and certainly for portfolio CFOs and FDs, I say you can often do more damage with a phone call than you can with like a whole day's worth of work. So, I think switching the mentality away from this sort of transactional, hourly, daily kind of model towards a more value-driven model is critical in understanding how many clients you can take on because you could ultimately take on many as you as you want as long as you're offering and providing the value that they need but I think where it becomes difficult for most people is once you start getting to three or four days a week worth of work uh or let's say even two or three clients context switching becomes quite hard. So, you know, if you're having to flick between different businesses or different kind of streams, that can be quite difficult. So, yeah, look, I mean, I think ultimately most will land in sort of two or three clients doing a couple of days a week each on average. Or the other end of the scale, you could have sort of really sort of pure portfolio doing a day a month with, you know, 10 or 15 clients. But, you know, my attitude is, you know, I got into the portfolio world because I wanted to be able to have that flexibility. So, I never look to fill up 100% of my time just on client work because there's other things that I do as well. 

Hannah Munro: 6:15 

And has, you know, that's the question is, has that shift into that portfolio world given you the balance and that flexibility to do other things with your life? You know, is that one of the benefits that you've seen? 

Aarish Shah: 6:28 

Look, 100%, because I mean, right now today, so, you know, my business Emerge One started off really just as a vehicle for me to provide portfolio CFO services. And, you know, and that was fine for a couple of years. But I started getting other FDs and CFOs approaching me and asking, you know, if they could work with me and through Emerge One, because they liked, I think, what I had to offer and what I was offering to clients and wanted to be part of that kind of story. And so, that flexibility has allowed me to grow the business in that direction as well. So, not only do I offer my services, but I'm building sort of a decentralized consultancy, offering CFO services via other portfolio CFOs to more clients. So, you know, whereas before, as I said, I could probably max out at two or three clients, I can now take on more because I can leverage the skills and the values that others have. So, absolutely, for me, it was critical. The other side of that is also the time to be able to spend with family, to be able to think outside of the day-to-day, I think is really critical. It's something that we don't do enough of in general, I think, not just CFOs, but in general. And I think probably the last year has almost certainly taught that lesson to many people that there is actually a need every now and again to slow down, to take a beat, to actually just think about things in a way that you can develop yourself without distracting from what you have to do in terms of delivering output for clients or for your work for that matter, right? So, yeah, for me, it's been great. It means that when I do travel overseas, I may still be working, but I've got that flexibility. If I want to take a day to go and do something else, I can do that. Others would argue, well, I could take a day of my holiday or my leave allowance. Yeah, you could do that, but you're all got to kind of negotiate that a bit harder than necessarily I do because I'm in charge of my own time. 

Hannah Munro: 8:37 

So, what does a day in the life of a portfolio FD look like? What's your day made up of? What kind of conversations and duties would fall under your remit? 

Aarish Shah: 8:49 

So, look, I mean, I work... with early-stage startups or early stage in growth. So, we work with anywhere between seed and series C, I would say, typically. So, my day can be everything from trying to figure out how to extend runway. It could be talking to investors. It could be closing out a fundraising round, literally three of those things. I think all three of those things I've just mentioned were part of today's day as an example. But yeah, look, it's talking to founders, it's understanding how the business is tracking, it's looking at kind of our leading metrics and trying to see around the corner and understand what's coming up and what we can do to mitigate any risks that are associated with that. So, a lot of what I'm doing I would say, is kind of strategic and forward-looking. It's what I like to call outwards and forwards, whereas I think traditionally finance and CFOs and the finance function in general has been kind of seen as backwards and inwards looking, right? We're always looking at the numbers that have already happened. We're always looking inside the business. But what I try and do for the clients that I work with, because that's the most value-added thing to do is to figure out, well, how do we take the business forward? Not how do we figure out what's happened, but how do we change what's going to happen? So, a lot of my time is spent, as I say, on that strategic piece, but ultimately it is a CFO role, so, it is looking at the numbers, it's understanding cash flows, understanding our forward plans, it's risk mitigation, and it's expansion, growth, and looking at various avenues around that, whether that's geographical, product, whether that's expansion of team, whether that's creation of new revenue streams altogether, really, really can depend. But typically, a day in the life for me is not structured, I think is probably the best way of putting it, because often it's dealing with things as they arise. I mean, obviously there are longer term streams that you're always working on, but the reality of a portfolio CFO is you're not sat there twiddling your thumbs waiting for something to come across your plate. You're actively looking at stuff on an ongoing basis. And then as things arise, you tackle them and then you work on all the other stuff in the background. 

Hannah Munro: 11:12 

And I was going to say, life as a startup CFO is very different, isn't it? So, you're not only a portfolio CFO, but you truly are also a startup CFO. And that brings its own set of challenges and interesting pieces. So, what are the real differences that you think exist between working with startups versus more established businesses? 

Aarish Shah: 11:33 

It's simple, right? It's cash. It's the easiest. I try and do a lot of educational work with founders. You know, I tend to talk, you know, I use that old adage kind of sales is, you know, sales is vanity, profit is sanity, but cash is king, right? So, the thing with startups is that they are constantly at the brink of running out of cash, constantly. I mean, it doesn't matter how well, like, you know, the one thing I know is that if we bring in funding into a startup today, in X months, and that might be six or it might be 12 or it might be 18, we're probably going to be going out looking for more funding, right? So, life is an ongoing tension between founders who want to optimistically spend and invest in growth early and finance saying, right, okay, let's be a little bit more cautious. I think and this is a real difficulty for a lot of people that come from a more traditional finance background, I would say. If you're not comfortable with those risky kind of investments in growth in a startup, it can be very difficult and very challenging because things aren't under your control. Things can slip. Things can change. you know, ultimately, you know, everything is based on predictive analytics, potentially, or predict, you know, in reality is just predictive kind of assumptions that the team is making, you don't have data necessary to back anything up. So, you are kind of flying by the seat of your pants to the extent that you need to control what's happening in the future, which means you have to keep your eye on that all the time. You know, it's the first thing you look at is it's, you know, it's always the first question on top of your mind is right, okay, what's the cash position? What are we looking like? How far is that going to get us? What is coming up that we need to be wary of? And you know, what can we do to mitigate any risk? 

Hannah Munro: 13:32 

Yeah, we did a really interesting podcast on funding is like ice cream. So, you can have a bit, you can never have enough but also have too much will make you sick. So, I think it's a really interesting piece. And I think that's something, that's a really good point you make about the comfort with the risk. So, if you're going into portfolio, becoming a portfolio FD, it's about making sure that you're working with the clients that work for you as well. not just, you know, because startup world is not for everybody. I think there's a real clear difference there in particular. So, what questions do you think people should ask themselves if they're considering going into a portfolio or part-time FD? What sort of questions should they be asking themselves to make sure it's a good fit for them? 

Aarish Shah: 14:18 

Yeah, look, I think that's an amazing question. And it's one that we ask the CFOs that do try, you know, do approach us and want to work with us. Because the worst reason to get into portfolio FD or CFO is because you're in between jobs. And the reason I say that is because being a portfolio FD, yes, you're not full time, but you are dedicating yourself to a business probably for a prolonged period of time. Now, it may not be five or six years, but it could certainly be one or two years, right? So, it needs to be a long-term commitment. So, the first question is, are you just trying to stop a gap? And if you are, don't do this. Just go out and find the job that you're looking for. Get a full-time role. Obviously, if you absolutely need to take on a role because you need the cash, I'm not saying that one shouldn't. But if you are trying to make a decision as to whether to go into portfolio FD or CFO work, then I think the first question is, if you are predominantly looking for something full-time, don't go into portfolio. And obviously that sounds obvious, right? But I think it can be counterintuitive for a number of people because I think some people also think that, well, I get into portfolio, and it'll lead to a full-time role. And that can happen, but it's not necessarily going to happen, okay? Because ultimately, and we tell startups this all the time, we're great portfolio CFOs. We may not be the best people. I may not be the best person, certainly, as a full-time CFO. And I know that because I know I'll get bored, right? So, one of the reasons that I do portfolio work is because I like variety, and I enjoy doing a number of things. I think the second thing to be really conscious about is, do you have your own runway, right? Building up a portfolio takes time, right? It can take anywhere up to six months to start getting into a steady stream of income. And as I mentioned earlier, there can often be kind of feast and famine. So, you may end up with no clients for six months and then too many for the next year and you have to kind of pick and choose. But you need to be able to be comfortable with your finances at a personal level to be able to go into it understanding that things may not happen as quickly as you want them to. And I think the final thing I would say about being a portfolio CFO or FD is, are you able to context switch easily? Like if you are someone that likes routine, likes stability, likes consistency, this is not for you. It just won't work because you're not going to be able to get that consistency and routine. And if you're not comfortable being able to pick up on one client at 9 o'clock and the other one at 11.30 and then do some stuff in between for both, you're going to struggle with this. And I think it is worth differentiating between being a portfolio FD versus being purely a part-time FD, because there are part-time FDs who just have one part-time role, that's great, right? That is just being a full-time equivalent, but on a part-time basis, right? Whereas I think truly portfolios, you are looking for multiple clients. So, it is a different kind of mindset altogether. And it's one that doesn't necessarily suit a lot of CFOs or FDs. And I think the final piece here, and I think this is probably the most critical thing, is are you comfortable and confident that you can sell? And the reason I say that is, you know, there is a huge amount of the role just is involved in selling yourself and your services to clients, right? So, if you're not comfortable doing that, then don't get into being a portfolio FD because it isn't necessarily the same recruitment process as actually going out for like a full-time role is. Although there can be overlap, right? But you need to have that confidence to be able to sell yourself. You need to be able to, you know, to be spending some time delivering on clients, but equally always looking at what else is in the pipeline because, you know, you never know when one of those clients is going to drop off and when you need to pick up the additional work. So, yeah, so, I think I think lots of questions that one should ask themselves. But for me, it really, it's less about skill set. It's more about personality and your kind of inherent traits and your character that will drive your decision as to whether you want to be a portfolio CFO or FD rather than being a full-time one. 

Hannah Munro: 18:51 

No, absolutely. And I think there's probably a natural set of like you say, characteristics or traits that people can spot in themselves. And if you're the sort of person that seems to shift role every 18 months because you get bored, that's a good indicator. Can you think of any other sort of... Yeah, you need that sort of thing. But if you're the sort of person that wants to spend, quite happy spending five or six years at the same company, then... that's not really going to be a good fit, is it? So, are there any other sort of indicators people can think about in terms of, or questions they can ask themselves? 

Aarish Shah: 19:29 

In terms of, yeah, look, I mean, in terms of whether, you know, if you're making the decision to move into portfolio work, I think the first thing is, have you had the experience, right? Because one of the things I do see is quite junior people saying that they are, certainly in startup world, not necessarily in large organizations, but slightly more junior people purporting to be FDs or CFOs. And because many founders don't have that experience of finance, they just assume accountant equals capable of being an FD or CFO. But actually, the reality is that in order to be a good FD or CFO, you need to have done know that strategic piece the sales piece you need to understand how businesses knit together more than just the numbers right um so, first off the bat do you actually have the experience and be really honest with yourself I mean don't you know don't kid yourself and think that okay well I've been a controller for the last several years um it's all right I can blag it because all that will happen is you'll try and blag it you may fail and if you fail that's not going to look good for you and certainly is going to potentially kind of um give you issues down the track so, better of working under a good FD or CFO, building that and then, you know, taking that transitional step. I think the other thing to look out for is, you know, and again, you know, my experience is working with startups, etc. Again, do you have that risk appetite? And not just because ultimately, you know, there is a lot of change, but equally, your clients may not be able to pay you. first month or the second month or they may have to delay you because you know revenue didn't come in or the fundraise happened too late or happened later than they anticipated so, you need to be able to stomach that sort of that sort of thing and look we're finance people uh so, one would expect us to be able to manage those situations but you know they can be they can be tough um I think the third thing is you know are you looking to be your own boss right I think the really wonderful thing that this allowed me to do was just work for myself, be in charge of my own destiny, not be kind of bound by an employer or HMRC for that matter or whoever, because I was able to make my own decisions. Now, obviously, at the end of the day, you're always working for someone. So, if you go into portfolio, you are working for your clients. But you have the ability to say, you know what, I want to work with this client, but I don't want to work with that one. You know what, I like that business, but I don't like this one. And you can pick and choose, whereas obviously in a full-time role, of course you can pick and choose, but it's just the one role, right? So, I think having that, you know, having that understanding that there is flexibility there and that, you know, you have a desire to work for yourself I think is really important uh and then finally I think you know for me the thing that drove me to portfolio CFO more than anything else was that I didn't want to work um for an institution I didn't want to work in a standard role I have an entrepreneurial kind of spirit behind me um you know I'm building a couple of businesses, plus the businesses of my clients. And that just really attracted me. And I think that's, to me, that's probably the key thing here. It's having that entrepreneurial spirit. If you're looking to be an employee, but under another banner, this isn't the right thing. 

Hannah Munro: 23:05 

It's basically running your own business. Your business just happens to be you know, offering strategic. And I think this is, I loved your point about, it's not just accounting wrapped up in a different role. It is that true CFO role. So, talk to me about that shift, because I think that's something we talk a lot about on the show. And I think it's really important to understand. So, what is the shift that you're seeing? What is the transition that you're helping businesses, you know, go through in terms of their finances and what they're doing? 

Aarish Shah: 23:38 

Yeah, look, 100%. I mean, so, I often get brought in to do strategic roles, and then kind of there's a whole bunch of finance operations that hasn't been dealt with. So, often, like the first thing is just fixing that, right? Because that's so, easy. And I say easy, but it is easier. There are so, many tools now that one can integrate. I'm sure you've done many, many podcasts about that. And you can go from zero to fairly competent finance operations in a fairly short period of time with tools like Xero, with the sort of payroll tools that are out there or expense management or all the rest of them. So, that means that A CFO's time should no longer be spent just trying to kind of keep the business. So, it should not be run the bank or run the business. It's about grown the business, right? So, the shift that I see or the shift that I try and communicate to my clients and that I tell them where we have the value add is that it's pointless coming to us if you want us to just do your bookkeeping and kind of churn out some numbers. We can do all of that. That's fine. but actually, that's not massively value additive. The value additive is via the relationships that we have, and that's relationships with funding sources, whether that's investors, whether that's debt, whether that's banks, whether that's sort of more sophisticated lenders. It's the relationships we have with experts within legal or tax or compliance or, you know, any number of things which can have critical kind of impact on the business. So, our ability, so, my ability, certainly, and I think the ability of really good CFOs and FDs is to be able to, you know, look at what the business has, understand where the business is going, and then try and build a pathway between those two things. So, if today to get from where we are today to where the business is planning to be in six months' time, we need to, argument's sake, ensure that we have the right documentation in place in our terms and conditions. Let's get that fixed, right? If we need to go out and raise some bridge capital because we're going to have a gap that arises in five months’ time, don't wait till five months’ time. Let's do that now. Right. Let's figure out what the story is, what the narrative needs to be today to be able to bridge that gap today rather than waiting until it's too late. How do we look around the corner and understand what the competition is doing and either get in front of them or do it differently? How do we think about, you know, finance as a company? as a real driver of the business and move it from being a cost to an investment. Move it from being operating overhead to really revenue driving, revenue generating. And obviously, working with startups, that's... easier to an extent, right? Because you have small teams and you have lots of people, often very unexperienced people, I would say, trying to do lots of things. And often when I come into a business or when a CFO or an FD comes into the business, we're often the first gray hair. And what I mean by that is, I mean, I do have gray hair, but what I actually mean is obviously we've had the experience, right? And going back to my earlier point, we haven't just been a controller that's kind of risen up the ranks. We've actually been there. We've done that. So, So, we know what we're looking for and we can guide founders or CEOs in a way that they potentially haven't had in the past. So, I remember we brought on a client several months ago and he actually approached us because he was really interested in the sort of things that I would be saying on LinkedIn. and elsewhere. And, you know, he specifically asked for someone who was as much a mentor and a coach as a CFO. And I think that's often a lot of the work that we do as portfolio FDs and CFOs is that, you know, mentoring, coaching and mirroring with the founders. Like, you know, founders have huge conviction in themselves, but everyone doubts themselves equally, right? So, a founder wants to be able to bounce something off of someone who actually has the experience and knowledge base to be able to say, you know what, that's a great idea. Or That's a great idea, but here's what I would tweak. Or, you know what, we should absolutely not do that because this is going to do X, Y, Z to the business. You're going to have to invest a ton more in non-accretive headcount and you're going to tank the fundraising that you've just done. So, absolutely, the shift, I think, is moving away from, as I said earlier, backwards and inwards looking to forwards and outwards looking. And I think the strategic CFO is really kind of, you know, it's a guide to the whole business. It's not just about finance. We touch everything from systems to operations, to legal, to HR, to revenue, to pricing strategy, to growth, and on and on and on. So, it really is, it's that tired phrase business partner, but it really is kind of a partner in the business that is sitting at the right hand of the CEO and really kind of driving the business forward. 

Hannah Munro: 29:24 

And I loved your talk about stop looking back. We use the same, stop looking in the rear-view mirror and start focusing out on what's in front of you. So, and I think that's one of the interesting shifts and certainly with the technology and, you know, anyone that knows me will know I can wax lyrical about technology and what it can do for businesses. Yeah, I'm a bit like you. I got into implementing because I love the variety. So, I get to do, I call it the fun stuff of finance, but it sounds like you enjoy your part of the puzzle as much as I do mine. 

Aarish Shah: 29:52 

Everything's fun for everyone, right? I think if I had the patience, and I think that's probably a character flaw of mine, then I would probably be quite interested in trying to figure out how to hook up all of the systems and make things work. And there's obviously a lot of people that are out there doing similar sort of things. But yeah, I think for me, I like that stuff to just be running smoothly so, I can come in and do this stuff. So, you're building the foundation for me to be able to do the work because I can't do the work without that foundation in place so, it's massively critical. 

Hannah Munro: 30:28 

And I think it was a really interesting point you actually made earlier about not, if you are going in as a portfolio FD, being really clear about what your role is, not being clear on what is the bookkeeper piece of the puzzle versus what is the CFO. And how do you handle that conversation? Because that's quite a challenge because most people, when they think of finance, they think of the person that's going to be processing their expense receipts and doing their bank rec. So, how do you hold that conversation with founders? I'm guessing you have it right at the beginning so, things are really clear. 

Aarish Shah: 30:59 

you know it's a learning curve I mean I think initially you know there's actually value in doing so, so, if it doesn't exist there's value in doing it because it allows you to learn the business but there's no point continuing to do it and the easiest way of having that conversation is just saying like you don't want to be paying my day rate for a you know, as a glorified bookkeeper. That's just of zero value to you and is, quite frankly, just not going to work for me. But no, I mean, the way we actually handle it is, well, first off, the bat, I started putting in finance operations specialists. So, our team consists now of, both finance operations specialists as well as the CFOs. Now, we tend not to look at that finance ops piece as strongly, but it's there if we need it to be there. But we typically get brought in or called in or asked to come into ventures in a number of scenarios. So, the first scenario is founders just don't have anyone in finance. They don't know enough about finance, and they've got some hurdle that they need to cross, and they just ask us to help them. So, that might be they're trying to do a fund raiser or they're trying to you know they're trying to expand somewhere they can't quite figure out what they need to do or something's gone wrong obviously is one of the normal ones or they're using like an external kind of accounting firm which again they're set up to do your stats do your VAT but they're not set up to really do much more than that because they're not internal operators we're in-house like a portfolio FD is in-house a portfolio CFO is in-house we're in the team we're not external even though we're external, right? And I think that's really important. So, we get called in when you either have no one or you have someone, you know, an accountant doing some stuff, but not really doing what you need them to do. They're not providing you anything valuable to drive the business forward. The other thing that we see is where you have someone too junior that has been over-promoted. I've seen in the past; we've come into businesses where the FD or previous FD has missed a quarter of a million payment and all of a sudden, your runway has shrunk by quite a significant amount. So, we see that, or we see often like CFOs that have come out of banking or practice that haven't operated in a startup coming in. And what tends to happen is they're used to having an administrative machine behind them and can't get their hands dirty. So, I know that was a bit of a roundabout way of coming to the point, but the point is in all of those circumstances, the first thing we do is assess what's required. We fix what's required, right? And if you don't need us beyond that, great, no problem, right? But my role is not to charge you a fee as a client. My role is to make sure that you have what you need. And I've literally had that situation recently. There's someone looking for kind of someone to do some bookkeeping work. We could do it. But I just said, it's just not worth it. Like for you, not for us. You know, I think it's better for you to go out, find a kind of an accountant that can do this, a bit of payroll, a bit of bookkeeping. And then when you need us to come on board, happy to have that, you know, happy to have that conversation. So, it is, it's, as you say, it's just being very upfront and honest about what we're good at, what we do, what we like doing, where we have a value, you know, where we can provide value. And, you know, and then referring on, and we always do this, referring on the people that are good at doing the other stuff. Because my aim here is to help this entire ecosystem of startups and growth ventures in the UK and beyond grow. And in order to do that, you can't be petty, and you can't be arrogant, and you can't try and be everything for everyone. So, we know that if you call us into a venture that is series B or beyond, we're probably going to struggle. It will be a full-time role, almost certainly. Or rather, there isn't enough room in finance to have a big enough team to cover everything that you would need. And therefore, your CFO, your FD does de facto have to jump into some of the more junior stuff, right? So, we're just very, very clear about where we can add value, how we add it. And we work with the clients to understand what their needs are. And if we can meet those needs, then great. And if we can't, we're just really honest about it. 

Hannah Munro: 35:27 

And it sounds like that relationship with the founder that you're working with is obviously incredibly important. How do you pick your founders? Like what are the things that you look for? Because it's a two-way street, isn't it? Because you've only got a couple on at a time necessarily. How do you figure out which businesses you want to work with? 

Aarish Shah: 35:41 

Yeah, that's a great question. And it's actually quite, it's both an easy and a difficult one, right? So, I think the first thing, what I personally look for is founders that will listen, right? And what I mean by that is, you know, I said earlier that often we're coming in as coaches, kind of mentors, right? This is a relationship that is more akin to kind of a partnership and almost like a co-founder type relationship, because you are so, critical to the business, right? A good CFO is critical to the business. So, you need to be able to work with a founder that is going to listen to you and listen to the advice that you give and act on that advice in a balanced way. That doesn't mean that they accept what you say blindly and just do what you ask them to do, but it means that they've got to be willing to listen and at least factor that into their decision-making process. So, the first thing is founders that listen. I think the second thing is it's really dependent on where their business is at and where they think their business is at. Because all too often you will come across founders that have a very, very bullish belief in their business, but are slightly detached from reality. And when you see that happening, it doesn't matter how hard you push and how kind of much work and effort you put in, you may not be able to circle the square. I've had conversations where a potential client has said, right, I'm going to pitch you. Sorry, I want you to work with us because we're going out and we're looking to fundraise. I have a look at the deck, and I say, okay, this is interesting. How much are you trying to raise? We're raising 10 million. Okay, you've got nothing. You've literally built nothing. nothing, you've got no interest, you've got a pitch deck. Why are you trying to raise 10 million? Oh, because my mate raised 10 million and therefore, I should be able to do the same. And I'm sort of sat there going, look, I know capital is ubiquitous at the moment, but it's not that ubiquitous, right? And by the way, here's everything that I could see in this business model that won't work and why I won't be involved. And it's really interesting because founders will get defensive and try and convince you that you're wrong. And that's fine. They should. That's their role as a founder. But I know enough about myself that if I've come into something with an expectation that it's not going to work, I'm often not proved wrong is probably the best way of putting it. And that's not to say that I feel like some sort of superiority complex as a result of that. All I mean is that if I think something's not going to fly, then it's better for me to not try and flog that horse just because there's a check at the end of the day. So, to your point, it can be very hard. It is about building relationship. It's about having someone that is working with you, that understands the value that you bring, that is listening to kind of the input that you give. And equally, as I say, it's about having conviction in the business itself, right? Because if you don't have that, then you can't perform. 

Hannah Munro: 38:44 

Now, if you don't believe in the business and the vision that founders have for the business, there's no way you can sell it. Well, you know, you'd be pretty impressive if you could sell it to FDs. But yeah, I totally get that and where that's coming from. So, if somebody's listening to this and like, that sounds like me, right? I'm interested in getting involved in the world of, and I actually think you were in quite a niche industry, aren't you? Because it's startup portfolio that you're primarily dealing with. So, if somebody wants to get into that world, like what's your top tips? How do they do it? What do they need to make sure they've, you know, what ducks do they need to make sure they've got in a row before they do? 

Aarish Shah: 39:21 

Follow me on LinkedIn, talk to me. Those are the first few things I write. No, look, joking aside, I think the things that you need to understand is first of all, you've got to commit, right? And what that means is don't be in a full-time role looking for a portfolio role because chances are the timing just won't work. Portfolio roles tend to be, you know, we need someone yesterday, not, hey, you know, let's work out your three months’ notice. So, that's actually the first challenge, right? And, you know, to what I'd said earlier. if you don't have the conviction that this is what you want to do, you won't end up doing it well for yourself or anyone else, right? So, if you are going to move into this, then quit your job and start looking. That's the only way, honestly speaking. So, that's the first thing I would say. The second thing I would say, though, is I did this really wonderful thing. It's called the Strength Finder 2.0. It's got nothing to do with finance. It's a tool that's used by Gallup. that was developed by Gallup, sorry, the pollsters. And it kind of lists out, I think there's like 32 traits or whatever. Think about who you are as a person. Understand what drives you. The things that drive me, I love educating others. I love learning myself. I love lifting other people and making them successful. And those are all really, really valuable when you're a portfolio CFO. because those are all things that you have to do. You have to work through people because you're not there full time. So, you need to make sure that, okay, if you have a junior team underneath you, you need to be able to empower them to be able to build the best that they can build. If you're someone that doesn't like working with other people, that just wants to be siloed, I think this is the wrong role, right? And again, this comes back to what I was saying about being a salesperson as much as a finance person. You need to have that balance of traits because it isn't a simple, you know, just because I've been CFO in X, Y, Z business doesn't mean that I could easily become a portfolio FD or CFO in a part-time situation because the dynamic's different. The way you manage that is different. So, I think take a very long, hard look at yourself and your I would say as well. And then finally, just be really, really clear about what your plan is. Is this something you want to do for two years because you've just had, for example, a baby, you're going on paternity or maternity, and you want that additional time with your kids? Great. That's wonderful. If you're doing it because you want to make a bunch of money, that's possible, it's not guaranteed, but it is because day rates tend to pay higher than an annual salary. If you're comfortable not having stability, then great. If you're looking for stability, don't go for it. I would say you almost want to write out a business plan of yourself. You've got to treat, even if it is just, you being a portfolio CFO, you have to build a business model for you, right? That is how much time do I want to take on? How much capacity do I have? What are the sorts of businesses that I want to work with? You know, so, I've worked, I've been really fortunate. Again, I'm a massive generalist. I joke and I've written about being a specialist in generalization. I've worked with marketplace businesses, SaaS businesses, consumer businesses, direct-to-consumer, subscription businesses. I've worked across a bunch of different industry sectors, so, edtech, consumer, SaaS, B2B, et cetera, et cetera, and manufacturing in a past life. So, I'm very comfortable with different business models and different businesses. Most finance people can be. But as a client, they're often looking for very specific experience because they want someone, especially from a portfolio FD or CFO, that can hit the ground running. So, they don't want someone that's going to have to learn on the job. They want someone that can come in and start making a difference. And I remember going into one role and the first thing I did was secure some financing against their R&D claim. And the founder was just like, blown away because in that one instance, I had effectively paid for, you know, whatever it was that they were looking for. It didn't really matter whether I put in a day or five, you know, that in and of itself was substantial enough to move the lever and move the dial in the business to extend their runway out and mean that they didn't have to go out and fundraise immediately, right? So, be really clear about, you know, how you can move the dial, what businesses you're comfortable working with, what you're comfortable doing. Don't do it as a means to gaining experience because this is the sort of stuff where you need the experience first. You can build on the experience, but if you haven't had that initial experience, I would say don't go into portfolio. And finally, look, it can be tough. I currently work, I would say, 12-ish hour days plus. Now, that's not to say you won't do that in a normal role. Of course you will, right? But those 12-ish hours are spent delivering so, services to clients, as well as building my business, as well as managing my business, as well as, as well as, as well as right? And I have, you know, I have obviously a family that, you know, that I like to spend time with occasionally. And, you know, you've got to be able to balance that. And I think, you know, I would say that portfolio, if you're trying to do it full time portfolio, i.e. five days a week, will end up being more than a full-time job. So, be really, really clear about where those boundaries are. 

Hannah Munro: 44:58 

I think that's some really good advice. And I think for anyone that's listening, you know you made a joke about following you on LinkedIn now I've actually been following you for a while so, to anybody that is listening and you know I will certainly put links to your profile in in the podcast because it's you know I think like anything it's not an instant decision and I think you made a really good point is it should just be a oh I'm not I'm looking for a new role I might try this you know it's quite an investment you know personally to go down that route so, it's for those listening if you're thinking about it think seriously Get the old SWOT analysis out and figure out whether it's a good thing for you. So, if people want to learn more about yourself and what you and the team do, how do they do it? Apart from LinkedIn, where else can they find out? 

Aarish Shah: 45:48 

So, you can visit our website at emergeone.co.uk. That's E-M-E-R-G-E-O-N-E.co.uk. You can follow the business on LinkedIn. So, you can follow me. My handle is ads.co.uk. I-N-U-K, A-D-S-N-U-K, both on Twitter and LinkedIn. Emerge1 underscore UK on Twitter. Emerge1 on LinkedIn. But look, quite honestly speaking, you know, I think there are so, many great resources out there, so, many great places that you can look to find them. We're one of many. We encourage everyone to engage with us. But obviously, a podcast like CFO 4.0 is just as good, if not better as well. But yeah, you can find us anywhere you look for My Smiling Face. 

Hannah Munro: 46:48 

Fantastic. Well, thank you so, much, Arish. And, you know, thank you for coming on the show and talking about your experiences. And it's been a great insight, especially the world of startup portfolio CFO. It's a whole different world, I think, to anything else. And it sounds like you love it as much as I love what I do, which is amazing. 

Aarish Shah: 47:07 

For sure. Any 

Hannah Munro: 47:08 

final thoughts for our audience? 

Aarish Shah: 47:10 

Yeah, look, I would say... I think it's really fulfilling to do the work that we do. I think we have the ability to impact and drive and shape kind of the future of some really interesting businesses. Nothing that I said today was about turning people off. I think it's just about being really, really clear with yourself about your motivations. But actually, any number of CFOs that I've spoken to that do portfolio FD or CFO work, they find it massively fulfilling. Often, they may even go back into full-time and then come back out again because, you know, they just miss that really sort of interesting ability to mix things up. So, yeah, look, I mean, I think really think hard and deep. But if it is something that is for you, it can be wonderful. For me, it was transformative, both in terms of my kind of life as well as my career. And I love what I do. Absolutely. 

Hannah Munro: 48:08 

What a way to end it. So, thank you guys for listening and for joining us on the podcast. And yeah, we'll pop all those links that Arish mentioned earlier in the show notes.