Here’s how start-ups in India are getting sound financial help!
Purba DasJul 21, 2015, 03.04 PM
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Start-ups are on a great start in India. As they climb up the ladder gradually, their need for a sound financial advisor becomes imperative. It is generally then that the company starts scouting for a Chief Financial Officer (CFO), which is crucial but a very expensive task.
And that is when advisory firms such
“Start-ups that are rapidly growing require CFOs to look after the financial functions of their company. However, a full-time CFO is expensive. New companies initially do not require a CFO,” said Rajesh Mittal, chairman and founder of ALAMAK Capital.
Bhairav Kothari, the founder and managing director of
“We also make business plans, corporate planning, budgeting and forecasting among others for our clients,” noted Kothari. The company also caters to companies in the small and medium enterprises segment.
It should be noted that typically in a start-up,
So, what drives the rapid increase in demand for a virtual CFO over a full time CFO. Mittal pointed out that a full time CFO demands a higher package in terms of remuneration while an e-CFO or shared CFO is paid as per the assignment.
“The charges can range from Rs 25,000 to Rs 2 lakh or Rs 3 lakh a month while a CFO on payroll generally draws a salary of Rs 5-6 lakh per month. A start-up cannot afford a full-time budget and hence go for shared CFOs,” he explained.
Besides, the fact that identifying a good CFO who can understand the company and its goals is also a tedious task and hence it is best considered to outsource this top job to experts. “We only hire people who have worked in the capacity of a CFO for a good number of years and of course have the requisite qualifications,” said Kothari.
While this may be the story from the demand side, the supply side story is also pretty interesting. Increasingly, experienced CFOs prefer to quit their blue-collared jobs in one particular organisation in order to cater different companies from different sector at a time. Generally a single CFO manages about five clients at any given time.
So, what future do we see for virtual CFOs? As far as our reading is concerned, with the start-up culture on a ride and young entrepreneurs coming up with new ventures, virtual CFOs will one of the most demanded services in the market.
Image credit: Indiatimes.com