- CFOs should consider using automation for simpler tasks that can help them rather than immediately building out larger finance teams which can be cumbersome and costly, said Navneet Govil, CFO of SoftBank Investment Advisers.
- Using automation as much as possible for reporting functions or account closings can help finance chiefs put critical resources to better use and enable them to think more strategically about periods of accelerating growth, Govil said Friday during a talk at The CFO Leadership Council's 12th Annual CFO Leadership Conference.
- “Oftentimes when companies are scaling, there is a tendency to build a large team, which is good if companies have a linear path to growth,” Govil said during the talk. “And what I’ve learned is there’s never a linear path [to growth].”
Govil has served as CFO for the SoftBank Investment Adviser team for six years, beginning his tenure a year prior to the launch of the company’s Vision Fund One. The $98.6 billion fund, now closed, is the world’s largest technology-focused investment fund, with a portfolio of over 94 companies including online mortgage company Better and rideshare Uber.
Outsourcing transaction processing areas such as accounts payable (AP) and accounts receivable (AR) as well as collections can enable CFOs to reduce costs, placing the burden of figuring out how to scale upon the third-party company and avoiding a situation where CFOs would need to determine how to pare down the team they have just cultivated, Govil said.
Understanding the appropriate cash runway for growth is also critical, Govil said, noting most CFOs should plan on a cash runway of between 12 to 18 months — a time frame that falls in a sweet spot in between too much cash raised at a lower valuation and too little cash raised at all. Automating as much of their reporting functions as possible can therefore grant CFOs more flexibility, enabling them to more flexibly respond to challenges such as large-scale macroeconomic or geopolitical factors on their path to growth.
Factors such as inflation, the ongoing Great Resignation and the global shift to remote work can impact companies’ growth targets, making it crucial for CFOs to create strategies to deal with such factors and to invest their resources where they will have the most impact.
“The areas where you want to invest your resources in are the finance team that’s doing decision support, or a lot of analytical work,” Govil said.
SoftBank Group, of which SoftBank Investment Advisers is a wholly owned subsidiary, has itself faced mounting challenges to growth amidst today’s changing financial and investment attitudes, with group shareholders losing approximately $140 billion in collective stock market value since the share price hit its market high in February 2021, according to a May 16 report in The Economist. The investment group’s planned $40 billion sale of chip designer Arm to fellow chip designer Nvidia was halted by regulatory authorities in February.
A potential slowdown of initial public offerings (IPOs) by today’s technology startups could also make it harder for the group to monetize and recognize early-stage investment gains from its first and second Vision Funds, according to The Economist report. Vision Fund Two boasts a more modest $56 billion in venture capital compared to Vision Fund One’s nearly $100 billion, spread across a much larger portfolio with the company having invested in 250 companies at this time, said Govil, who in 2016 was the investment company’s first finance employee hired for the funds.
The vision funds collectively contribute 50% of SoftBank Group’s overall value, he said during last week’s talk. SoftBank’s investment strategy has also changed with Vision Fund Two, with the group investing in earlier stages than the prior fund and writing smaller ticket sizes, Govil said.
Navigating the changing technology environment smoothly is a top challenge for today’s CFOs, especially as a steadily increasing crop of startups has led to a glut of available CFO positions, Govil said. This, combined with the trickle of employees who chose early retirement during the COVID-19 pandemic, means opportunities to fill such a role have expanded rapidly over the past two years, he said.
“If you want a CFO job, I don’t think it’s that hard to get a CFO job,” Govil said. “It’s available. And quite frankly, the criteria for selection isn’t as strident as it probably was five or 10 years ago. My advice would be, don’t chase the title. Just because the job says CFO doesn’t make it enticing.”
Rather, CFOs looking to move to startups should consider their ability to make an impact at the firm, he advised, including considering how their potential experiences at larger companies could better serve smaller entities and how they can build out strong teams.