FINANCE CHIEFS HELP to push growth in burgeoning technology start-ups, ahead of those without financial expertise on board.
Research by accounting firm CBW into 100 successful TMT start-ups, and 50 unsuccessful ones, found finance directors were a catalyst for growth. Those with FDs tended to grow sales faster while using less cash; had strong balance sheets; and attracted more investment.
TMT starting up with small teams tended to perform better than lone entrepreneurs.
Other strong performers were those that diluted their stake in the business through – founders of unsuccessful businesses held on to more equity.
External investment from ‘business angels’ and private equity firms was more prevalent in the successful businesses.
“FDs clearly allow businesses to ‘put their foot down hard on the growth accelerator’ and the end result of this is the business achieving greater revenue through highly efficient cash utilisation,” said CBW partner and report author Nyall Jacobs. “This should be a critical consideration amongst entrepreneurs since the higher their sales revenue, the higher their company’s value will be.”
Government policy should not attempt to encourage bank lending for TMTs, instead they should incentivise more external investors to provide funding, Jacobs added.
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