Private Equity to Startup CFO?

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Assuming your first two jobs have been at strong brand firms, I don't think you're shutting off the opportunity to return to growth at all. I'm guessing you have a lot of tech PE contacts and that's something you can leverage if this doesn't work out.

That said... I don't know that CFO at a Series A is a once-in-a-lifetime opportunity for someone working in the tech space, there will be more of these opportunities available to you esp as you become more senior, so I would make sure you REALLY are sold on the company's growth prospects. Timing is also everything in startup land and I'd be at least slightly concerned about a series A startup's 5 year path right now given markets and funding environment.

Assuming this startup doesn't keep you up at night because the idea is so good - I might wait it out another 2 years to get a bit more PE experience so easier to fall back into that + more importantly wait for market environment to improve... but I'm incredibly risk-averse so that's my 2 cents.

I have a senior associate on my team who did BB IB ANA —> MF PE ASO —> Startup Exec —> MM PE SR ASO. 

Maybe a year or two behind peers in progression after spending 3 or 4 years at the startup, but largely a blip over a 30-40 year career, and you never have to say “what if?”

Can you do this gig on a part-time basis for some time to test water ? 

I'm in a relatively chill group, and have been helping out a buddy of mine as a fractional/part-time CFO in fundraising/investor roadshow, process management, growth strategy, and some accounting. He raised a Seed Round and is now raising Series A at a pretty healthy dollar amount. I've been doing everything for free and I don't regret it a single bit. There is some chance that he would hire me as the CFO once the time comes, but who knows? I won't hold resentment if he does not.   

I started my career in banking then made the move to startups. One of my gigs was "head of finance" for a Series A startup, helped them raise a Series B and ran finance for a while. Couple notes:

1. PrivatePyle is right on a number of points, most notably the role in the finance org as the company scales. If you want, you can look at Series E/F/G companies today and see which finance people have been there 4+ years. Most of them have been layered by a CFO who has done 2+ IPOs already. This isn't necessarily a bad thing, it's just a different job. I have a friend who loves the Series A through pre-IPO journey "CFO" work and has made a killing riding one of them to an exit. Doesn't want to do the IPO CFO thing. But, depends on what you like doing. Earlier stage will be more about fundraising, operating model, unit economics, cross-functional work, etc. Later will be more about building / managing a finance team. 

2. You will have a *harder* time going back into the buyside after moving to an operating role, but it won't be that hard. The best resume for your next growth/PE step will be staying course. That said, you have a story to tell and people will understand. Just know it might take more reps / effort on the story if you get a few years down the road and want to go back to investing. 

3. You have to be okay making less money in the operating role. You have to assume that your equity will go to zero; most Series A companies fail. And your cash comp is definitely lower than the buyside. Do it because you like the company, founder, higher responsibility, and CFO work rather than because you can make a 7 figure payout in a few years (repeat: this is so unlikely that you should put the odds basically at 0). 

If you PM me I can send you some more resources on what it's like on the operating side

You 100% want to make sure that the company treats finance professionals as first class citizens, not just back office bitch work. Honestly I would advise against taking this role given you won't have anyone to learn from (as much as people on WSO shit on operating roles as "easy" sometimes, there's a lot to learn about being a CFO that you're just not really that exposed to in IB / PE). I joined a startup after 3 years in IB and 2.5 in PE (turned down a Director role where I would've been the only finance person for another one w/ a fully built out team where I joined as a Senior Manager instead for that reason, both Series B companies). After almost 2 years am now back in PE - you can look at some of my old posts / AMAs for more detail if you're curious.

Also I exercised all my options when I left and pretty sure they'll end up worthless, so Private Pyle is exactly right in that equity can be a total wildcard.

Hard to generalize because every situation is so unique, but I know several people who have gone from UMM to portfolio company CFO or COO and have been happy with the transition. I agree equity is a wildcard, but when it works out, it can be just as if not more lucrative than partner level carry (although way higher risk). Personally, I would not have a problem hiring someone on the buyside with a few years of portfolio company experience (and might even highly value that experience), but if you are really worried about getting re-hired, you might want to contemplate how enthusiastic you are about the portfolio company opportunity because there are no guarantees (i.e. market where portfolio company goes bust could be correlated with weak buyside job market).

This would be a pretty hard no for me. And I don’t think it’s a once in a lifetime opportunity. A CFO at a series A startup (and I’ve seen many) isn’t really that great. Most eventually end up looking for another job in 1-2 years- most spend a lot of their time dealing with unrealistic founders and very little technical support/infrastructure to create reliable financials and have realistic FP&A. It’s not much better than being an analyst at an early stage company- it’s certainly not high finance trying to get a decent undergrad out of college to be able to handle AR/AP.
 

I’m not sure what the financial picture of this prospective company is but I would require a long hard look at their financials as well as underlying projection assumptions before ever considering. Keep grinding and get a better CFO offer down the road- I’ve seen it with bankers on porticos. I haven’t even gone into todays current market- which we all know funding is pretty tight- and sounds like you probably are looking to getting into a cash burning company. 

I was going to chime in and say that NuclearPenguins probably has a good perspective on this, but he beat me to it, haha.

A couple of observations and things to think about. I would obviously vet the founder/company/team etc, expert options to go to 0, and so on,  but I would also really press on what you're doing as a CFO at a Series A company. Unless they've raised a big A round or are the type of company that needed a ton of cash and is scaling like crazy, there usually isn't a ton of work for a CFO to do at a company that has what, maybe ~50 employees and only a few million in revenue. Sure, maybe you build an operating model and help them track numbers, forecast a bit, etc, but a startup CFO is very different than a bigger company CFO. Honestly, what they really probably need is an accountant/bookkeeper more than anything. You won't really be learning the skillset that is required as a PE backed CFO type of role or a F500 CFO type of role.

So if you're ok running payroll, making sure taxes are taken care of, some light cap table management, cash forecasting, etc then that's great, but I wouldn't get that excited about the CFO title as being some form of management role or that you won't be doing all of the IC work. It's going to be a mix of odds and ends and probably pretty low level stuff.

With all that said, I have no context here, maybe it's actually a 100 person company, they're at $15M in revenue going to $40M next year, raised a $10M A and are planning on going out for the B in 9 months time. The role can vary widely, but I'd really make sure they've given it some thought as opposed to just thinking they need a CFO, wanting someone young/cheap with good finance brands on their resume and having the cash to hire.