#7 The 7 Fund CFO Priorities

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Today’s Top 3:

• Focus on the 7 Fund CFO Priorities! The to-do list is long when building a modern finance and back office. Use these 7 priorities to focus your time.

• What will drive the most value and also help you scale? These are the two questions we start with. Value is often measured in terms of dollars from investors and returns generated from investments. Scaling requires the right processes, playbooks, and team. Balance driving value and scaling!

• Maximize efficiency today and minimize future pain points. The right structure and prioritization will drive efficiency and minimize future pain.

Why This Post + Backdrop

Every week, we’re asked the same question by multiple #VC funds (and other fund strategies). How do you prioritize a long to-do list for of the fund finance function? Can you break it down in a simpler framework than 23 points?

One answer we share frequently: we bucket tasks into The 7 Fund CFO Priorities!

Over the last 7 weeks, we’ve shared some key building blocks for the modern CFO & Back Office for a VC fund:

1. So What’s a VC Fund CFO

2. VC Fund Model (Back to Basics)

3. VC Fund Budget (ASAP)

4. Fund Launch Checklist (2.0)

5. Demystifying Fund Admin (Accounting + Operations)

6. Use Efficiency Tools to Modernize

7. The 7 Fund CFO Priorities

The 7 Fund CFO Priorities are a framework that VC funds we’ve worked with have found effective and help tie these building blocks together. 

The 7 Fund CFO Priorities

1. Fund Model (Construction & Reserves): Model of how you will invest your fund (keep it simple in Excel to start). This answers key questions like how many companies, how much per company, over what time period? In today’s rapidly changing market, we advise funds to assess and re-orient quarterly at a minimum.

2. Budget (Fund & Mgmt. Co): Forecast of revenues and expenses (write it down, even if it’s just on a napkin to start). This will help make key decisions. How much does it cost to start and run a fund? How do you classify expenses (fund vs. organization vs. mgmt. co.? This tool helps you assess and plan correctly.

3. Process Documentation & File Organization: The Master Process Document is the source of truth for how things get done (execution) and who is responsible (accountability). The ones we build typically cover the following core areas: companies, operations, investor reporting, and compliance. It’s also critically important to have a robust system for file organization and record keeping.

4. Legal & Compliance: You’ll need a trusted lawyer that has worked on similar investment strategies or structures. Lean on them to provide guidance on critical issues (and do your own research as well). Lean on your law firm and/or a compliance expert if your size, strategy, and/or investors requires it.

5. Fund Administration & Accounting: Partner with a qualified fund administrator that is familiar with your strategy and structure. They should provide fund (and mgmt. co.) accounting, capital calls/distributions, quarterly reporting to investors, and support with audit & tax.

6. Audit & Tax: Most institutional investors require an external audit of your fund’s finances and tax reporting. Find a firm that can work efficiently with your fund administration & accounting teams and that has supported similar strategies and structures.

7. Bank, Bill Payment, Credit Cards, Expenses: We’re lumping a lot in here but they’re all closely related! Leverage technology and tech-forward firms when they’re a good fit. We work with several banks, often see Bill.com for bill payment, credit cards (Ramp, Brex) for smaller expenses and Expensify / Divvy for expense tracking.

That’s all for today folks! Thanks for your support and spreading the word! Share this on Twitter or LinkedIn to help grow “the crew!”