PracticeConsultingTo be or not to be a dot.com FD

To be or not to be a dot.com FD

It is interesting to see how some dot.com founders measure success. Growth in employee numbers, global networks of offices, number of subscribers and media plaudits rank highly, but the basics of sustainable revenue streams, profit and cash just don't make the grade.

Maybe these concerns of the ‘old economy’ just haven’t been seen as sexy enough for the go-getters of the new.

Certainly, the concepts of budget control and the drive for profit and cash generation that characterise non-technology entrepreneurs run contrary to the anarchic culture of brand building hot-houses that were held out to be success factors in new economy businesses.

You can imagine the thinking: having an FD would hold them back. All those checks and authorisations would reduce creativity and spontaneity – the life blood of a sector creating itself day by day. Budgets would be out of date before they were issued as new targets and new ideas over-ran the original business plan. So why bother?

All of this, sadly, reflects on the profession. Why are we seen as being not only of little value but actually as a hindrance to dramatic growth? I suspect that it is because we act as the conscience of the business. And the best CEOs know it. They actively look for FDs who will be the ‘voice of reason’ in the heat of battle, the person who coughs at the strategically important moment and asks the question that brings the meeting back down to earth.

But venture capitalists lambasting the dot.coms is interesting. Someone invested in these companies and gave them access to significant amounts of capital without an FD in place.

Too often plans that talked of having FDs ‘ahead of float’ were enough for investors scared of missing out on the ever rising wave. Was their good sense over-ridden by the scale of the opportunities or did they really think that the new economy would be different? I guess we will never know.

From here on it should be back to the old adage of: market opportunity, quality of offering, protected intellectual property rights, plus a complete management team.

Henry Fairpo is a corporate finance partner at Pannell Kerr Forster.

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

11m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

12m Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

12m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

12m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

1y Stephanie Wix, Writer