Growth, fundraising and exits interview with Jason Lund
We caught up with Jason Lund – a highly accomplished CFO and COO with lots of experience of working in high growth, investor backed technology companies to get his insight on how to effectively grow and exit an entrepreneurial business:
How did you become a CFO?
I started in public accounting with PWC. I knew pretty early on I didn’t want to specialize in audits, tax, or really even work for a big accounting firm. I knew I wanted to work directly in a business. One of the things I did was align myself with rising CFOs and other execs, then followed them around from company to company, rising along with them. I had done this with mentors for 15 years or so. That’s one of the things that’s helped me out a lot.
In the last few years, I’ve moved away from the core CFO role. I was keen to get as close to the customer as possible – negotiating contracts, and taking on customer-facing functions. Ultimately a CFO is responsible for storytelling around how the numbers come together, and doing that is best through the experience of the customer with your product and your company.
What do you see as the essence of the CFO role for a growing technology company?
I think it’s different for a high growth business than a more mature one. At its core, you need to find a way to get along with the rest of the management team who have different perspectives and specialisms. It’s the CFO’s job to get to that level. Ultimately only the CEO and CFO has a perspective across everything in a business – not just a single department. You must get on their level and discuss issues in their sense. Stay away from numbers in the beginning. Talk to them about their business and department initially, and then use data as a proof point to help inform their decision making.
The CEO and CFO need to be aligned on what’s best for the business going forward. Don’t give the board any surprises – make sure they have lots of visibility.
How do you maintain a good relationship with your investors?
Investors want to know that there’s a healthy independence between the CEO and CFO. It’s not good for the CFO just to parrot what the CEO says – that doesn’t mean you should have visible conflict between you – but the investors have to feel that the CFO has a relationship with the CEO where they can influence the business together. The CEO and CFO need to be aligned on what’s best for the business going forward. Don’t give the board any surprises – make sure they have lots of visibility.
You have fundraised multiple times – what have you learned from those experiences?
Fundraising, and more broadly the “how to’s” of business scaling, have changed over time. Today, you have a lot more available information and toolkits that you didn’t have in the past. You’ve seen this information offered as advise on LinkedIn and elsewhere – whether product-market fit or go-to-market efficiency should be the centre of focus on a given funding round, for example. Satisfying investor expectations in those areas allows management to focus their pitch on what differentiates the business, how their market is changing, and competitive threats. Speaking of which, investors want a healthy scepticism from management on the opportunities and challenges for a company.
The next few years will be interesting. We’re coming from a 10-year period where many businesses and investors had fewer headwinds, and now we’re going into a period of where decision making around scaling a business, as well as investor funding to support businesses, will be different.
How do you prepare a technology company for a sale?
First of all, you need to understand whether you are selling from a position of strength or not. As a CFO and as the objective party in the room, you should know well ahead of when the business begins to underperform or when the investors want out. I’ve sold a business from a position of weakness and it’s no fun. Depending on the experience of your management team, you’ll likely need an M&A advisor and people that have been through it before. For instance, these people know how to provide data room information to buyers and pitch the business in a way a buyer understands how your product and team fits within their business. You also need to keep the business running as well as possible whilst you try to sell the company. Balance between spending time selling and running the business is key. A typical sales process is 6-9 months, so that’s an extended period to be distracted with the sale and you don’t want sales to drop off or other customer issues to surface during that time.
Tell me more about some of the exits that you personally have been involved with?
I’ve enjoyed building companies and handing them off to a buyer who can do more with it. I’ve sold two businesses to IBM – one was a private company, the other was public. Most recently, when I moved to London three years ago, I came out to run a scaling software business, and we almost immediately decided the best thing to do was to sell it. It was unexpected but it was the right thing to do for all the stakeholders. The market had changed and become much more competitive. We found a buyer with legacy technology who needed to fill a gap in their product, and we were able to fill that gap, and sell the business within three months of starting discussions with them. It’s critical for a CFO to understand the market, the funding, the competitors, the appetite of the buyers and so forth – and therefore whether it’s the right time to exit or not.
If you have a business in a more defensive position, I would imagine the finesse with which you manage the exit process has more impact?
I think that’s right. If buyers are already approaching you, they’ve likely already thought through the product and customer fit. If you’re taking the company to a prospective buyer, you need to make it easy for them to understand the synergies between your businesses. You need to paint the picture for them – what do these two businesses look like together? You might need to lean more on relationships to open doors and meet potential buyers. You need to point out the strengths in your business to maximise the value.
If you’re taking the company to a prospective buyer, you need to make it easy for them to understand the synergies between your businesses. You need to paint the picture for them – what do these two businesses look like together?
You’ve spent a lot of time working in the US before moving to Europe more recently. What differences have you noticed in the tech ecosystem?
I considered moving to London 10 years ago, but the ecosystem wasn’t as developed as it is now. Now there’s more growth capital and people are willing to take more chances to achieve success. The individuals are every bit as good as they are in Silicon Valley, as are the ideas. With more time, maturity, and willingness to take risks, we’ll see more and more larger technology companies emerge. From a market perspective, the US is always a big market that most entrepreneurial tech companies want to enter sooner or later. I’m excited about the potential of the European market.
How can you personally help technology companies to grow their businesses?
I’ve defined a few key areas where I can help growing companies. In fact, I spend a lof of my time right now advising companies on market strategy, financial and operational performance improvement, help with fundraising and exits, international expansion, organizational scaling – knowing when to build out your management team, how to properly compensate people and so forth. Breaking down silos across the business and helping a management team to work together and truly collaborate is rewarding. One of the pieces of advice that I’d give is that while it’s very hard to take a business to $10m ARR, it’s another battle entirely to get to $50m or even $100M ARR. Often you need a different sort of leader or management team depending on the stage of the business. Be loyal to the management team that got you to each growth stage – but not too loyal.