Young companies are looking for veteran CFOs to navigate the SPAC explosion.
Not long ago, innovative young companies resisted hiring experienced (middle-aged) financial executives as long as possible. Founders preferred to keep costs down and so avoided expensive senior executives until the need became unavoidable.
Lately, however, the explosion of SPACs (special purpose acquisition companies) has changed that dynamic. SPACs are contacting startups earlier in their development, offering an alternative route to public markets. Founders are finding they want the support of experienced CFOs in deciding whether to prepare for an IPO, accept a SPAC offer or simply wait and raise more capital. According to S&P Global Market Intelligence, startups that have raised between $10 million and $100 million of venture capital are increasingly hiring seasoned financial experts. The number of CFOs in that category increased 95% from May 2020 to May 2021.
Four years after its creation, Bungalow Living, Inc, an online house-rental marketplace, attracted the interest of several SPACs. The company hired its first CFO, Karen Walker, a seasoned executive who already had an IPO experience, to forge its strategy.
Similarly, gene-editing startup Excision BioTherapeutics recently hired Christine Silverstein to put the company in order for an eventual public listing, valuing her experience in a public pharmaceutical company. Driverless-car developer Pony.ai, which had already raised $267 million, asked a former JP Morgan executive to help with growth and global deployment in America and China.
The mandates are as varied as the startups. Brandon Alexander, CEO of robotic greenhouse operator Iron Ox, hired Tom Constantino—an expert in artificial intelligence who started out at HP and PwC—as Iron Ox’s first CFO–in large part because he knows how to provide several years of audited financial data and present solid debt-to-equity ratios. More than that, however, Alexander tasked him with the building of a corporate culture that is “kind and inclusive.” That’s beyond the traditional demands made of CFOs—then again, these are times of change.