How Strategic Finance Helps Companies Scale Faster w/ Jannat Shah Rajan | Forestay Ventures

Amardeep Parmar: [00:00:00] Today, we have a masterclass on strategic finance. We're going to talk about what strategic finance actually is, how to excel in that career, what traits you need to be good at strategic finance. Why founders should be looking at people for strategic finance, how strategic finance people can convince other people in the organization to take on the recommendations and then look at what the future paths are for people in strategic finance.

Amardeep Parmar: We've got our expert with us today, Janet Shah Rajan, who's a VC and growth investor at Forestay Capital and was previously the head of finance at Lean Technologies and the head of strategic finance. At Hopin and she's had many different roles within this space and she's also Newton Venture Fellow. So very lucky to have her on today and hope you get to learn lots.

Amardeep Parmar: So can you tell us what exactly is strategic finance?

Shah Rajan: Well, maybe let's start with kind of what happens in house in a, in a finance function. So you have the accounting function, which I'd say is the base of what you need in, in [00:01:00] finance. You need to produce accounts. If you have a business, you have cash going out, cash coming in.

Shah Rajan: So you have accounts payable, accounts receivable, payroll, treasury management, all of those things. So that sits in accounting. Once you have that reporting on top of it, you probably have FP& A once you get to a certain level of scale. So this is the so what of what you've had reported in accounting and strategic finance is almost the so what of the so what so it sits even on top of FP&A or it's like an FP&A plus where you're kind of almost an internal strategist for the business looking to create value or unlock value or Uh build more value for the business.

Shah Rajan: So A lot of your role is diagnosing why metrics are the way they are. Lobbying for what is a metric that various departments should care about. So you're talking to product and engineering about, you know latency of their [00:02:00] product, maybe, or the cost to host on a server going very, very deep into maybe your AWS costs, or maybe you're talking to go to market about money on the table and thinking about literally the fundamentals of price elasticity and what you could experiment with there.

Shah Rajan: There's that kind of micro of what goes on in the business. And then there's the kind of investor relation side of things, the CorpDev side of things, i. e acquiring and divesting businesses. You could reach a stage where you have CorpDev in strategic finance, could be outside, but I think of strategic finances.

Shah Rajan: Kind of this in house consultancy that's built to, to deliver financial value. Uh, so you're schooled in finance, maybe you have some strategic inclination and you're ultimately kind of the initiator and creator of your own work in some way, but also you're, you're working quite intensely on, I'd say company and corporate relevant projects.[00:03:00] 

Amardeep Parmar: And what skills do you think people need to really succeed in that strategic finance area? Like what are the key traits of people? Because obviously many people work in traditional finance. What are the people that stand out maybe that could go into strategic finance and thrive? 

Shah Rajan: Yeah, absolutely. I'd say strategic finance professionals are usually highly, highly analytical and data driven.

Shah Rajan: So, you know, they, they love Excel and they also love, or Google Sheets, so I don't want to divide the audience. And then you also have people who just love SQL, playing with data, business intelligence, and what have you. So there's this analytical training that might have come from, you know, the typical routes of investment banking, or maybe data consultancy or management consultancy, but then also there's just this kind of commercial awareness, I would say, of what it takes, what good looks like in a company, maybe you have an awareness of.

Shah Rajan: What it means to take majority interest in businesses. So, um, mergers and acquisitions [00:04:00] also minority interest. So maybe you come from venture capital. That's how, how I transitioned. And then just, I'd say the attitude is a lot of it. So you're a very proactive person initiating work, initiating projects or lobbying for projects that

Shah Rajan: would generate value creation. So there's this proactivity and a kind of hunger to better the business. And also this sense of kind of getting to the answer yourself. So the idea that, you know, you can go deep into the problem by yourself because your analytical skill set is, is really deep enough to do that.

Shah Rajan: Or it's just a can do attitude really. 

Amardeep Parmar: So you mentioned there about  bettering the business. Let's say there's founders right now listening, thinking about should I hire somebody in strategic finance or not? What would you say to them is the value of hiring somebody in that role in order to help them scale their startup?

Shah Rajan: Yeahabsolutely. I'd say that there are obviously some founders who approach this with more of a chief of staff mentality and that person can quite [00:05:00] often have a very very similar background to what a strategic finance person would have. I would say maybe I could have played it both ways, but obviously that depends specifically on the mandate of your chief of staff.

Shah Rajan: I would say, depending on the stage of the business, it's probably healthiest to start with kind of an FP&A or an FP&A plus. So this was part of my mandate when I was working in strategic finance, or it was FP&A plus strategic finance. So you might start with, okay, let's, let's go into the financials and really diagnose what's going on.

Shah Rajan: Let's do business partnering, which is what FP&A or financial plan, planning and analysis does. They will partner with the go to market teams. They'll partner with sales, marketing, customer success, or after sales to really understand what's going on. What are the key drivers? What can be unlocked there? Um, really explaining the numbers and a lot of FP&A as

Shah Rajan: the name might suggest is planning and forecasting. So they are trying to [00:06:00] get information to say, okay, what is the trajectory of the business? They might do a little bit depending on time constraints and what they can do to kind of say, okay, well, let's look for optimizations here, but that's where strategic finance can really sit on top.

Shah Rajan: So I'd say to founders, if you're looking to build out this function, one, um, Make sure you have the fundamentals right first. Like you can't do any of this without good reporting in the first place. So always be iterating on making sure that, you know, you have good reporting to get the data out, both financial data and product data and sales data, whatever you need to be able to perform the analytics in the first place, I'd say to start with FP&A plus, so maybe

Shah Rajan: you have the kind of queen of all trades situation going on where they, where they do a bit of everything, particularly if you're in, in startup mode. And then three, when you're, when you're in scale up mode, even there is an element of where you are in the [00:07:00] economic cycle, you know, how well the business is doing as to whether you want strategic finance, or you want to pair them back a little bit more to FP&A and operational finance.

Shah Rajan: You know, you need to think a little bit strategically as well about where you are, you know, markets aren't quite where they were in 2021, where a lot of scale ups did build out the strategic finance unit when, you know, the market was in a certain way, you might find that there are still strategic initiatives to be done.

Shah Rajan: They might be more about salvaging value in some senses and figuring out where to double down rather than creating net new value might be a slightly different role. So I'd say those are probably the three key things to think about when structuring the finance function overall, or the office of the CFO, if you wanna think about it, and what is the complementarity to the office of the CEO or if you have one, the office of the COO, if you have a [00:08:00] BizOps style function as well, and how you delineate between what is strategic finance versus what is something else.

Shah Rajan: And that might actually mean BizOps for you. It might mean a chief of staff for you, but I would say not to think of anything too much siloed because strategic finance is very much not a siloed role. So you kind of have to think about your organization in general and what makes sense when you're thinking about this value creation role.

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Amardeep Parmar: I know you've gone into investing now and you're focusing more on that area. But let's say you were to join a startup today and you're heading up this strategic finance. What were the first steps you take in order to try to? make a difference and hit the ground running? 

Shah Rajan: Yeah, I think it's, um, there are probably a lot of initiatives a strategic finance professional could do.

Shah Rajan: I would say figuring out what the north star metrics are that really matter to the business and digging down into the component parts of what makes that. So for example, if you're trying to optimize [00:09:00] gross margins and you're a software business, you might say, okay, What are my hosting costs? And then you'd say, let me, let me dig into that.

Shah Rajan: Let me get into the dashboards of AWS or whatever tool I'm using. Let me think about product usage now. Okay. What is the denomination of usage? For example, on a streaming platform, is it number of video? Hours per person. Okay. How do I unify that video hours per person with the AWS cost? How do I just, like distill right down to the cost of broadcasting to one user per hour?

Shah Rajan: And then you say, okay, this is like the nugget that determines my gross margin because there's an element of scale, there's an element of product usage, and obviously this impacts the P& L and then ultimately profitability. Okay, I've got this, how do I now get leadership to buy into this? How do I get [00:10:00] engineers to buy into this?

Shah Rajan: Who in engineering is working on latency optimization? Who's working on... These kinds of costs to really say, okay, is there any margin of improvement here? Because I'm not an engineer, I don't know. So is there something we can do to improve this? Is there something, what is the, what is the minimum viability?

Shah Rajan: At what point does this, uh, suffer in terms of quality? Do we actually find out from this nugget of information that our, our quality is higher than industry benchmarks. What are the industry benchmarks? So you can really, really get obsessed with this one tiny metric. But we started at gross margin and we ended up at this very, very distilled metric.

Shah Rajan: So I'd say to add value, um, figuring out also the priorities of leadership, turning them into metrics and then figuring out exactly what goes into those metrics and then getting the relevant people in the business to care. Because ultimately, you know, As a [00:11:00] strategic finance professional, I can maybe be a bit of a doctor and diagnose the numbers, but I can't improve the product.

Shah Rajan: Well, maybe I could, but I can't sell an incrementally new product to a new market. So, so there are lots of different things to, to kind of figure out there, but it is kind of developing this obsession with metrics and getting people to, to care about those and making sure. That there's something measurable that you can improve upon or qualitative that you can improve 

Amardeep Parmar: So is coming across to me already that you really enjoy what you're doing there and like having this kind of obsession, like you said, and it's, it's almost like a way to play.

Amardeep Parmar: Right? So a lot of people, maybe from a finance background that often have to do things that are quite. Business as usual, where it seems like in strategic finance, you get more of that role to be able to dig into numbers and find problems and find ways to, as you said, be proactive. And you mentioned there about getting other people in business to care.

Amardeep Parmar: How did you, do you have any challenges in that? And what were you able to do in order to, once you had your research done, [00:12:00] your analytical, um, projects done, to then try to get that to be changed within the business? What tips do you have for people there? 

Shah Rajan: Yeah, it can be very, very difficult to kind of, uh get people to care but coming back to the BAU, Um, you will also have responsibilities that are BAU and you know, everybody needs to pull their weight and keep keep the lights on there might be different things that are mandated of you depending on your strategic finance role, you might have FP& A responsibilities that mean that, you know, you're doing reporting month in month out, or you're taking certain meetings for headcount planning or, uh, revenue targeting or whatever that might be.

Shah Rajan: So those responsibilities continue, but in any other capacity that you have, you, you can create these, these projects. I would say firstly, they have to actually be relevant to the business. You know, I'm not going to tell an online events company to acquire a farm, uh, because I'm very, very [00:13:00] passionate about farming.

Shah Rajan: So, you know, like a bit of a wild example, but first start with what leadership. Cares about what the board might care about and then take it from there and say, okay, Well, are we showcasing what we need in terms of metrics? Are they good enough? So you take a very consultative approach to this this problem and then then in terms of getting people to care, it's hard because everybody is stretched, particularly in startup land, you know, you're, you're probably doing the role of three people and I fully respect that of the people that I've asked to do multiple things for me over the years.

Shah Rajan: I'm very, very thankful. I think the one thing about startup DNA is that everybody cares. So when I'm talking about this kind of AWS optimization point, there is somebody in the business who is specifically thinking about this, but they perhaps [00:14:00] don't have the unification of The metrics of the product output.

Shah Rajan: They, the thing about the rest of the business is it's kind of a hub and spoke model in terms of the data that they have. So the engineer who's looking after AWS or that subscription or, you know, that usage, they have no idea of the downstream effects of, you know, how, how it translates into, how much product usage they had.

Shah Rajan: So actually. By giving them something back, you're saying, look, I've taken your metrics. I've taken sales metrics. I've taken product metrics and put them together. And this is what we're seeing. And then, you know, you just have a conversation and you say, look, I'm giving you visibility into your pride and joy, your product, your,

Shah Rajan: your platform, how it's performing, um, what do you think? Is this good by, by your, um, kind of expertise? Where are we? [00:15:00] And you just turn it into a conversation. You really involve them in it. You find that actually a lot of people value being brought in because ultimately business data, particularly as you scale up, it does live in silos.

Shah Rajan: A lot of people might not have the privilege to see the financial data, or they might not have the access to see the sales data, and they don't have the time to put this together. So you're also helping people do their job better in some sense, but not better because they're underperforming, but focus their attention on what matters because said engineer might have been working on improving something else.

Shah Rajan: And then they say. Oh, well, actually, knowing this now, I can double down on this because that will have the most impact. So, you're kind of, kind of showing people what the big picture looks like after having drilled down and come back up yourself. Um, so you find that, particularly in startup DNA, where people take a lot of pride and joy in what they do, and generally, you  know, the first hundred [00:16:00] employees that go as far as first 250, they're, you know, They're really invested in the building rather than the maintaining of things.

Shah Rajan: So once you show them, okay, well this is what we're building, but there's like this limiting reagent here that means it's not quite getting there, and this is what the big picture looks like. They care. The hardest thing is... You know, getting their time, but provided you show them value as with anything else you show a client value, then they say, yeah, let's untap that.

Shah Rajan: It's it's the same. These are your colleagues, but also the clients of the data analysis that you do. 

Amardeep Parmar: I think one of the interesting  things there, too, like I said, it's like, once you're able to find these major points, right, is that where's the career progression go? If you're working in strategic finance, what are the next steps?

Amardeep Parmar: What do people often? In that role, then look on to take on in the future. ‘Cause obviously you've gone into investing. Is that a typical path for people in strategic finance or what have you I think one of the interesting 

Shah Rajan: x It can be, uh, sometimes in later stage, I think, um, [00:17:00] not to focus too much on the investing side, but there is an increasing wave of investors who are getting operating experience perhaps as an alternative to the typical MBAs or say, uh, five, 10 years ago to,

Shah Rajan: to be a more relevant investor board member. I have heard of a few. There are a few at say IVP or other firms who have done this. Um, generally strategic finance professionals, then they're not from the typical accounting background. So an accountant might go into FP&A and might ultimately go into strategic finance, but

Shah Rajan: they come in from maybe this investment banking consulting or some sort of analytical, um, strategic background elsewhere. And then when it comes to career progression, they might want to go back into those universes of, you know, the typical parts of what, um, investment bankers go on to, which could be buy side or what consultants go on to, might be founding something yourself. 

Shah Rajan: There's always a question of, does a [00:18:00] strategic finance person aspire to be a CFO? Maybe, maybe not, because when you're a CFO, your responsibility portfolio increases, which means the depth of what you can do analytically, uh, can decrease. I would say the kind of double edged sword of success in strategic finance is that you create all these initiatives, these projects.

Shah Rajan: But if we take that AWS example, maybe a dashboard gets created, the value of monitoring this month in, month out, or week in, week out, whatever the cadence might be, might become a particular PM's responsibility. Or product manager's responsibility or chief of staff's responsibility. So once you've kind of done the initial diagnostics and piloted the value of, of maintaining such a thing, it might not be your initiative anymore.

Shah Rajan: And this might happen again and again, up to a point where you say, okay, the company's being successful in this value creation, and there is a chance you actually make yourself redundant. [00:19:00] Um, or you say, I've done the scope of everything I can do to get the company from you know, a single digit ARR to a triple digit ARR, annualized recurring revenue, whatever Northstar metric this company has.

Shah Rajan: And you say, especially if you're a doer, maybe the challenge for you is then over and then you look for that role again. So you might look for that role again elsewhere to kind of start back where you can really create value in the early stages. You might go into double down into corporate development.

Shah Rajan: If there's more of a, um, mergers, acquisitions, minority investments, um, value creation going on in that company. You might focus in on investor relations. You could go into a bizops or business operations. If that's where a lot of the data analytics lies and you want to double down on that skillset. It's a complex one to really figure out because the personality type that usually wants these roles there.

Shah Rajan: A technical generalist, [00:20:00] and uh, it's hard, at least personally, I found it very hard to satiate the what next. 

Amardeep Parmar: And like looking  at that, because you've now experienced some giant companies that have done very well and helped them scale along their journey. You must have seen plenty of mistakes and made mistakes along their journey as well.

Amardeep Parmar: What are some things that people in strategic finance should look out for where maybe they spend their time in the wrong way? And you can potentially save them some pain.

Shah Rajan: Yeah, I'd say communicating your value is very important, or communicating what you're working on is very important. There might be some projects that you're mandated on that you can't talk about, but there are definitely things that you can.

Shah Rajan: I'd say don't operate in a silo, don't think of yourself as back office, as G& A or finance functions sometimes do. Get to know as many people in the business as possible, and learn. If you think of yourself as an internal consultant there to serve everyone, you're there to serve [00:21:00] customer support, customer success, sales, marketing, product, engineering, um, the rest of GNA, uh, talent, uh, people ops, that there are so many functions there to, to help out.

Shah Rajan: Get to know as many people as possible and understand. You know, the block isn't their work because the block isn't their work is where you can deliver value as well. So, I'd say those are kind of the main things, um, I think to be truly successful in the role, just get to know as many people as possible and you just learn so much.

Shah Rajan: I'd say other pitfalls are probably know when to let go. No one to let go of a project and just hand it off to somebody else. There are times when I certainly held on to certain projects that probably weren't worth my time or energy. Once I solved for the problem, I was still holding the pen on the solution for probably a year longer than I [00:22:00] needed to on one particular project.

Shah Rajan: I think, if my former colleagues are listening, they'll know exactly what this is. Um, so I'm not going to say what it is. See, it's a, it's, it's a running joke, but know when to let go. Know when you've delivered your value and now they're diminishing returns for your involvement and you can, you can pass it off, but it is very easy to get attached to little micro projects that are, that belong to you for a period of time because they might have been your brainchild, but you do have to pass the baton.

Shah Rajan: I think there's a lot of literature from big tech companies talking about giving away your Legos. It definitely applies to strategic finance because you're working on a portfolio of work and that portfolio needs to turn over as well. 

Amardeep Parmar: It's been really  insightful and I think it's going to help so many people in the audience.

Amardeep Parmar: Can you tell us a bit more about what you're working on at the moment, what your future steps are? 

Shah Rajan: Yeah, sure. So obviously I really love this value creation piece of of what goes on in strategic [00:23:00] finance and I believe the best way to marry that with my previous experiences is actually returning to the venture capital side of things so I'm now an investor again investing in B2B companies including software and largely tech enabled and yeah, I hope to apply what I've learned in the operating field of strategic finance into, um, helping companies grow as an investor and so on.

Shah Rajan: So, uh, that's, that's the direction I'm taking my strategic finance experience in. 

Amardeep Parmar: Thanks so much so far. We're going to move to the quick fire questions now. So first one is, who are three British Asian entrepreneurs that you'd love to spotlight, that you think the audience should be paying attention to?

Shah Rajan: Firstly, we'd like to mention Aarish Shah. He's the founder of Emerge One. He's a fractional CFO practitioner, and he's been very, very supportive of me, particularly my views on strategic finance. I think he shares a lot of them. [00:24:00] So definitely big shout out to him. He does a lot to help startups, but also has a practice of his own.

Shah Rajan: So that is his business and his baby. Then another one I'd like to shout out is Anushi Desai. She's the founder of Plant Pops. It's a healthy snacks business. We actually went to school together. And then when she was going about her entrepreneurial journey, she was very, very kind to, uh, tell me her story and what she's planning on doing.

Shah Rajan: So I've been following her for, for some time. Uh, definitely check out her snacks. They’re very very good. And then, um, lastly, uh, family friend of ours, Mishali Patel. She's the founder of Casa Del Gelato. It's a chain of, um, ice cream or gelato and dessert bars. Um, it's just, it's also funny because she's actually lactose intolerant, but she develops all her own products.

Shah Rajan: She makes them on site. So, uh, you know, check her out as well. Um, she's doing great work. [00:25:00] 

Amardeep Parmar: Yeah, so i've obviously interviewed Aarish before but the other two are new to me So i'm gonna have to check them out myself, too. Next question is if people listening right now have like really appreciated your advice here They want to reach out.

Amardeep Parmar: They want to follow you and learn more about what you're up to, What's the best place to go? 

Shah Rajan: Yeah, I think, um, controversially, I think the best place is still for me on X or Twitter. So I'm Jannat Shah by my maiden name on, uh, Twitter. and then I'm on LinkedIn as well. I think, um, Jannat Shah or Jannat Shah Rajan or Jannat Rajan, one, one of the many variants of my name will, will appear there.

Shah Rajan: We'd love to connect. 

Amardeep Parmar: And then is there anything that maybe the audience could help you with right now? Is there anything you're looking for help with that? they could reach out about and be useful for you. 

Shah Rajan: Well, uh, I guess a quick plug. I would, I would love to, uh, find a B2B businesses that are looking to raise.

Shah Rajan: So I'll be doing a series A, B, uh, C fundraisings for, for companies. So if you're raising and you're looking to raise capital [00:26:00] and you'd like to work with, with me and my team, um, please reach out. 

Amardeep Parmar: So again, thank you so much for coming on. Any final words for the audience? 

Shah Rajan: Well, firstly, thank you for having me, Amar.

Shah Rajan: It's been, it's been great. I'm really passionate about what strategic finance can do for businesses. And yeah, thanks everyone for listening. If there's anything I can do to help, just reach out.

Amardeep Parmar: Hello, hello, everyone. Thank you so much for listening. It means a huge amount to us. And we don't think you realize how important you are. Because if you subscribe to our YouTube channel, if you leave us a five star review, it makes a world of difference. And if you believe in what we're trying to do here,

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