Building A Brand In The CFO Services Space - Deepak Narayan MyCFO

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Building A Brand In The CFO Services Space -
Deepak Narayan MyCFO
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MyCFO works with companies to fill the gap that
exists between the demand for high quality
corporate finance services and the inadequate
supply of it. In three years, the firm aims to
grow its team size from 130 to 1,000 people, with
aspirations of becoming the leading brand in the
CFO services segment
http//mycfo.in
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Deepak Narayanan and S. Venkats entrepreneurial
journey commenced in the year 2007 when a number
of companies from international markets were
trying to set up business in India. The larger
ones would go to larger consulting firms like EY
and KPMG to help with India entry strategies, but
what about the midmarket companies? These
companies are neither too small nor too big to be
able to approach large organisations without
being ignored, points out Deepak Narayan. Hence,
they held on to this niche and setup Wealthtree
Partners, to offer India entry strategy
consulting to companies from around the world.
Both partners were so bored of their finance
functions in their previous organisations that
they did not want to get into it. However, as
luck might have it, they stumbled upon the idea
of setting up MyCFO, a network of CFOs to offer
corporate finance implementation services to
clients. The recession in 2008 taught us that we
were relying too much on companies which are
coming from outside India, states Narayanan.
The gap that the duo identified was while
companies were scaling up, the finance and
accounts functions were light-years behind. And
most companies didnt have a CFO or even if they
had one, they were so caught up in day-to-day
cash flow, finance and accounting operations.
http//mycfo.in
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Sometimes you need people who have seen
companies scale from a Rs 50 crore company to a
Rs. 500 crore company. It will depend on the
aspirations of the person on the ground
Hence, they got into this space and engaged with
a few of these companies. One thing led to
another and eventually, three years back, we
branded this service as MyCFO, states Narayanan.
MyCFO is now a part of Wealthtree Partners.
http//mycfo.in
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Today, MyCFO is a prominent CFO services firm in
India, which provides CFO and finance
effectiveness services to clients across industry
verticals and size. The companys CFOs do not
sign balance sheets, but actively get involved in
all other tasks, which a CFO does and also
provide strategic level inputs.  Their typical
engagement period is now one year and above.
Three years back it used to be below six months,
then it moved to nine months. Now it is 12 months
and above. Maximum we have worked with a client
is four and a half years, recalls Narayanan.
MyCFO currently services clients pan India with a
team size of 130 people spread across seven
cities including Mumbai, Delhi, Bangalore,
Hyderabad, Pune, Chennai and Coimbatore. The
market opportunity for the companys business is
large, as many listed companies do not have a CFO
(almost 2,000 out of 6,000). The company is also
working with around 36 PE and VC funds to aid
their portfolio companies. It has a current
client base of 90 and has serviced almost 225
companies in the last three years.
http//mycfo.in
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The founders did not raise any external capital
when they set up the company. They brought in Rs.
1 lakh when they started and won their first
client when they started the service. The company
is debt free even today.
Into the finer nuances
MyCFO works with companies to plug the wide gap
that exists between the demand for high quality
finance services felt by high growth companies
and the inadequate supply of such services at the
right levels of ownership, quality, timelines and
more importantly, one that aligns with the
companys vision. With a number of companies
sprouting, companies growing, and family-managed
businesses becoming PE invested, how does one
fill the huge gap? We are in a space not as a
company that body shops but as people who will
take on responsibilities of a CFO and service it
through a team of people on the ground, says
Deepak Narayanan. The engagement model is a
tight onsite model which allows companies to see
that it is taking a lot more responsibility and
is present when it actually scales up or down.
http//mycfo.in
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Hence, the two roles that the company plays are
that of a CFO (business plan, MIS, budgeting and
cash flows) and support role (helping CFOs
improve finance effectiveness within the
organisation by designing ideal organisational
structure, internal controls, implementation of
ERP systems and more). The company also helps its
clients get exit ready, prepare for initial
public offering and strengthen internal processes
and practices of listed companies. What may vary
in our model is the number of days in a week that
we engage with the client. For example, if its
an extremely small company, it may need just
three days in a week. Then, that CFO will be
assigned to another project he or she can work on
in parallel. The challenges with smaller
organisations lie in providing high quality CFO
input at the cost they can bite. Therefore, the
shared concept helps, says Narayanan. For midcap
companies, the team is larger around three
people will be assigned to handle the project.
http//mycfo.in
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MyCFO doesnt position itself as an outsourced
service firm because it doesnt operate on a cost
plus model. With this model, there will
probably be a 15 to 20 per cent savings for the
client. Moreover, the CFO that they hire might
take six months to really hit the ground and
start running. But in our case, since we have
seen the situation and we come in as a team, we
will be able to do it much quicker, says
Narayanan. Secondly, when companies scale up,
they will be able to bring the right team more
quickly than when they identify someone and hire
them. MyCFO does not allow its client companies
to choose the team or candidates and its entire
business model is built on trust and reputation.
We have given up clients who insist on looking
at the candidates before placing them there. It
does not gel well with the philosophy for which
this brand has been built, states Narayanan.
http//mycfo.in
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Meeting the challenges
If a company needs to move to the next level and
if you have people who have worked only with
start-ups and not organisations that have scaled
up, that in itself is a problem, states
Narayanan. He continues, Sometimes you need
people who have seen companies scale from a Rs 50
crore company to a Rs. 500 crore company. It will
depend on the aspirations of the person on the
ground. So how does one deal with a situation
like this? One needs a very strong team, a good
project management system and the ability to
cross leverage learnings. Two other challenges
the company faces, apart from business challenges
in terms of expansion and foraying into other
services are, one, non-standardisation of
services and two, getting the team which has the
mindset to be able to deliver. What I mean by
mindset is, if you typically look at an audit or
consulting firm, they have the mindset to be able
to look at multiple clients and change companies
within a period of six months. They have a
better sense of what it takes to work with
multiple clients but they lack functional skills.
They have always been advisors and they are used
to a culture where they ask companies for
information and never get into the details,
states Narayanan
http//mycfo.in
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On the other hand, those from the industry, may
not have worked with multiple clients, but are
functionally about 80 per cent better than
someone from audit background. They are more
hands on and our preference is to tilt towards
the latter, says Narayanan. The company does not
recruit freshers as the time taken to orient them
is high. It typically looks for people with an
experience ranging from 3 to 30 years. We
recently got the CFO of BASF and Hiranandani to
join us. They are a part of the leadership team,
states Narayanan.
Going forward
We dont sponsor any events, but we are called
to speak at forums, says Narayanan. He is also a
part of several mentorship networks such as
NEN, GenNext Ventures, TIE and more. Even though
start ups are just 15 per cent of overall company
revenues, we still engage with them because it
gives us a satisfaction of giving something back.
We dont work only from a revenue stand point,
says Narayanan. These apart, the ecosystem is
strong now and, many CFOs know them.
http//mycfo.in
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The company may not enter new markets, as it
believes that seven cities constitute 85 per cent
of its market in India. It will only get deeper
in each of these cities. It has about 20 clients
in each of the cities, other than Mumbai and aims
to get 100 clients in the next three years in
each city. We may also look at overseas
expansions by providing services in markets like
Africa and Middle East where the skill deficit is
higher as compared to India, says he.
Additionally, MyCFO aims to grow its team size
from the current 125 to 1,000 in the next three
years. We may even get into products at some
point of time, states Narayanan. One of them
could be the automation of MIS services.
Currently, the company supervises 2000 people
across all clients in finance and accounts space.
Can we provide intervention and curriculum that
will help an entry level person to become a
better finance manager and soon? And, how do we
bring such practical level interventions? There
are some possibilities we are looking at over the
next three years, says Narayanan on a parting
note.
http//mycfo.in
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