Can you afford to ignore your finances?

What might be the most overlooked function in an early-stage startup?

It can’t be product or tech as it shapes the core story of what the startup intends to solve. It can’t be sales as revenue is needed to sustain the operations. It can’t be marketing as consumer facing apps can’t do without it.

Finance is often the most critical-yet-ignored function in early stage startups. While founders are busy in product, sales, team-building and ops, finance is commonly relegated to accountants. Accountants generally are good with the accounting software, most likely Tally in India, but view the finance operations from a traditional business lens rather than the metrics required for a growth oriented startup.

Second, in the early stage of the startup, financial compliance does not receive the attention it deserves. As the famous quip goes – “If you think that compliance is expensive, try non-compliance!” – inefficiently managed books of accounts, compliance related documentation, has the potential of wreaking a hard-won fund-raise deal in future, when large VC funds and seasoned investors start probing deep on financial due diligence.

Third, without the CFO or a financial controller, which is often the case in early stage startups, the founders lack a critical layer of strategic financial planning over and above the accounting team which is primarily manned by junior accountants. This often leads to inadequate cash flow management overlooking unforeseen situations, incomplete debtor & creditor management, unavailability of readily reportable financial data, lack of governance of commercial contracts leading to financial risks.

Ultimately, all this leads to sucking up precious founders’ bandwidth in tactical firefighting tasks, which could otherwise be better utilized in strategic tasks of building the core business.

At ESV, we have found a solution for these entrenched yet easily avoidable startup inefficiencies, which we call FinStack.

Startup Funding Summary

GreenCell Mobility, Mumbai-based EV startup, has raised $41 Mn in a funding from REC Limited – Read More

Wiom, Delhi-based telecom startup, has raised $17 Mn in Series A funding from RTP Global, YourNest, Omidyar Network India, Global Brain, Blume Founders Fund, Alteria Capital, Stride Ventures, Stride One and 9 Unicorns – Read More

Ethereal Machines, Bengaluru-based CNC machines manufacturer, has raised $7 Mn in Pre-Series A funding from Peak XV’s Surge, Blume Ventures, Ganapathy Subramaniam, Mathew Cyriac, Lip-Bu Tan, Finvolve, 9Unicorns, Venture Catalysts and T2D3 Capital – Read More

Kapture CX, Bengaluru-based customer support automation platform, has raised $4 Mn in Series A funding from Cactus Venture Partners – Read More

Varashakti Housing Finance, Chennai-based fintech startup, has raised $4 Mn in Series A funding from Incofin India Progress Fund – Read More

M&A Snippets

Mumbai-based financial services provider Pantomath Financial Services Group has acquired Mumbai-based fintech platform Fundgini for an undisclosed amount – Read More

UK-based SaaS platform InVentry has acquired Krishnapura-based workplace management solutions provider Hipla Technologies for an undisclosed amount – Read More