April 1, 2020
3
MIN READ

Whitepaper: Tactics For Startup Finance Teams to Navigate Covid-19

Finance

Optimal actions change every day. To help out, we decided to put together a tactical guide based on some things we’re thinking about doing at Cledara. We want to help startup finance teams to help everyone get through this as strong as possible.

Finance professionals are the unsung heroes of the startup world. In normal times, they can help founders raise bigger rounds, spot when to be more aggressive on CAC and grow faster. With Covid-19 throwing the playbook out of the window, CFOs and Finance Directors at startups are more important than ever and could be the difference between a startup flourishing or struggling.

News is coming super fast right now and it seems the whole world is learning what exponential curves really feel like. Founders are having to think about so many things - the team, customers, investors and a thousand other things. A well prepared finance team is uniquely positioned to help founders see around corners and make better decisions.

Optimal actions change every day. To help out, we decided to put together a tactical guide based on some things we’re thinking about doing at Cledara. We wanted to share this to help startup finance teams to help everyone get through this as strong as possible.

Looking at data from the Dotcom Crash and the Global Financial Crisis, things were not as dire as the headlines make them out to be. Let’s check out the impact on startup creation, startup funding and spending on software by small business and enterprise.

The number of tech companies that were started in each of the last two major economic crises were flat, or, in the case of the financial crisis, actually were 30% higher after the crisis than before. This means that if you sell technology to tech companies, then your addressable market isn’t likely to change much, or may actually grow. This is especially the case if your software captures market trends – for example, during this crisis, videoconferencing and remote collaboration tools are doing really well.

In terms of funding, it’s likely that the changing behaviour from VCs in March 2020 isn’t going to stick around too long. Even in the Dotcom Crisis, funding rounds in 2001 were 20% higher than 1999.

In the Global Financial Crisis, funding rounds grew massively; the number of funding rounds were 74% higher in 2009 than 2007. Lots of research has linked this to action by Central Banks to lower interest rates (quantitative easing) forcing investors to look for yield by moving to riskier assets like venture capital. With Central Banks around the world taking similar actions to stimulate the economy by lowering interest rates in response to Covid-19, venture capital is likely to be a source of yield for investors once the impact of Covid-19 is more known and investors start investing again.

The other way to assess the impact is to look at how businesses changed their behaviour and reallocated resources during previous crises. Anecdotally, we are hearing that churn rates are going up and SaaS spend is going down as startups look to cut spending before cutting payroll expenses. Having said that, we’re not yet seeing that in our data and data from previous economic crises don’t support the belief that it’s likely to happen this time around.

There is no evidence that either the Dotcom crash or Global Financial Crisis had a significant negative impact on technology spending by either SMEs or Enterprise. Having said that, averages can be super misleading and it may be vertical specific. If you’re product is a tool to help remote collaboration (Slack, Zoom etc.), you’re likely to be experiencing a lot of growth right now as entire new customer personas look for products to ease the transition to remote working. If you’re selling technology to restaurants, physical retail or companies in the travel space, your experience is going to be quite different.

To receive the full 18 page report and learn about the tactics financial professionals should be doing today, complete the form below so that we can send it to you.

Contents

Contents

Subscribe to our newsletter

Receive the latest insights in your inbox

Share this post

Subscribe to our newsletter and stay informed on the latest SaaS insights

Explore more

Explore more

9 Best Spend Management Software Solutions for 2024

Discover the best spend management software for your needs, with this detailed rundown of the tools on the market.
Read more

How to write a CFO report: 2 free examples

Assessing and communicating your company’s fiscal status is a key responsibility for finance leaders. Here are 2 CFO report examples to speed this up.
Read more

What does a great CEO-CFO relationship look like? 10 Tips

As a CFO, you’re the CEO’s right hand person. The company hinges on your working relationship—so here’s how to strengthen it.
Read more

7-Step Checklist to Improve Employee SaaS Onboarding

Here’s how to plan a super smooth employee SaaS onboarding: one that gives new hires an excellent first impression and sets them up to add value as soon as possible.
Read more

The Best Cap Table Management Software: 5 Options for 2024

Essential information on the 5 best cap management software tools for 2024, and why each one could be a great fit for your business.
Read more

Your First 90 Days as CFO: 11 Steps to Early Success

Your first 90 days as CFO at a new company set the trajectory of this chapter of your career. Here’s a checklist of how to play these valuable initial weeks for maximum impact.
Read more

The Top Subscription Analytics Software for 2024: ChartMogul vs Baremetrics

If you’re a CFO for a tech company, subscription analytics software will make your job a lot easier. Here’s a rundown of two of the best.
Read more

The Top Accounts Receivable Software for 2024: Upflow vs Chaser

Here’s everything you need to know if you’re in the market for accounts receivable software and want to make the best choice, with a focus on Upflow and Chaser, two leading options.
Read more

10 CFO Performance Metrics: What Makes a Great Finance lead?

These 10 performance metrics indicate a great CFO. Fulfil these criteria, and you’re on track to lead your business to financial success. 
Read more

How Scaleups Can Maximize Software ROI in 2024

Wondering how to improve software ROI for your company? In this post, you’ll learn everything you need to know to drive maximum ROI from software investments.
Read more

A Comprehensive Guide to Key Performance Indicators for CFOs

Here’s 23 KPIs CFOs should track in order to gain a full overview of their business’ financial health.
Read more

14 Smart Strategies to Reduce IT Costs as a CFO

Software is typically a company’s second biggest expense after payroll, so here are 14 actionable ways to get your spending under control and reduce IT costs.
Read more

10 Must-Have Software Tools for CFOs

According to Cledara’s data, these software tools for CFOs are absolutely invaluable. Save time, reduce errors and increase compliance with these programs.
Read more

The Complete Guide to Forecasting SaaS Costs for 2024

As we enter 2024, accurately forecasting SaaS costs is more critical than ever for CFOs. With tightened funding, volatile markets, and increasing SaaS expenditures, getting your 2024 projections right has major implications. This comprehensive guide equips you with the key strategies to master SaaS cost forecasting.
Read more

Financial Planning and Analysis (FP&A) Top 10 Software Tools

Interested in learning how to enhance your FP&A strategy with the right software tools? This guide is here to help.
Read more