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Mark Pettit joined London-based venture capital firm Connect Ventures in 2016 as Head of Finance. Earlier this year, he was made CFO, and sees his new job as assisting the partners in making strong financial and investment decisions, putting the firm on the front line of SaaS, fintech and digital health.
“My role was to come in and take as much of that finance slack away from the partners [as possible] so they can focus on the areas where they can make a big difference,” Mark says.
One of his first missions has been driving the team toward using data management software that helps create a more reliable source of truth, which the entire firm can look at when making decisions. He’s also helped create a KPI framework which Connect Ventures can use when deciding which early stage startups to get in on.
Mark’s work has paid off: The firm invested early in software that proved useful — and successful — when the pandemic forced much of the world into remote work.
“We actually invested in that before COVID happened. We thought the progress [toward this software] was accelerating, but the pandemic has really sped it up 10 times. So we’re pretty excited,” Mark says.
On this episode of The CFO Playbook, Mark lays out how he manages day-to-day workflow as a CFO, the challenges of growing a small venture capital firm’s finance team, and his outlook on the future of remote work.
Name: Mark Pettit
What he does: Mark is the CFO at Connect Ventures, a venture capital firm based in London that invests in seed-stage companies operating in the SaaS, fintech and digital health sectors.
Key Quote: “Things [in VC] can move super fast, and if you’re the kind of person who doesn’t like to change what you’re doing very often, then fund finance might not be the right place for you.”
Where to find Mark: LinkedIn
Consider your investment criteria — but be prepared for surprises.
Connect Ventures has been able to get in on trends very early by evaluating startups against its investment thesis. Since the investment group gets in at the seed stage, sometimes it’s investing in an idea rather than a product that’s ready to hit the market.
Even a well-thought-out thesis can’t predict every event that will impact your investments. Mark says his team invested in a few different software startups before the pandemic, knowing that software use was going to grow as society advances. The pandemic accelerated this trend faster than anyone could have anticipated, and Connect Ventures had already got in on the ground floor.
Think about switching up your portfolio management software.
It’s crucial that everyone in a VC firm — or any organization, for that matter — is looking at the same data when making decisions. Mark says that his team has been using Airtable, a spreadsheet-database collaboration service, instead of Excel. Long the holy grail of portfolio management, Excel doesn’t allow for the same degree of intricate data management, he says. There are other options, but whichever you use, the software has to be accessible not only for the finance team, but for everyone else.
Look at unique software approaches in day-to-day operations.
Data management isn’t the only thing a venture capital team needs to curate software for. There are some tech tricks you can use to improve workflow across the board, for example when creating quarterly reports and providing updates to partners and portfolio companies.
Mark says he and his finance team use tools like Kanban and Notion to manage their daily workflow. That includes creating meeting pre-reads that can help everyone get up to speed on key decisions, making meetings between the team and partners as efficient and productive as possible. He also recommends creating reusable templates for deliverables — you don’t have to reinvent the wheel every time you send a newsletter.
Be strategic and reasonable when delegating work.
Since Mark was doing so much financial work on his own during Connect Ventures’ first years, he was used to having a lot on his plate. But at a certain point, he knew he had to hire someone else to help — even if he had trouble letting go of some of his projects.
A venture capital firm has to do nitty-gritty work — like filing compliance reports and submitting management accounts — that isn’t always the top priority, but is critical. Expanding the team to include people who can help out with these tasks allows the firm to double down on analysis, and make the best investing decisions possible.
“I see three main stakeholders. Our investors — our limited partners who invest into the funds. The portfolio companies who are ultimately our customers. And then the partners themselves. I have to think of them as stakeholders, as customers that I have to report to, and treat them with the same level of thinking and reporting as I treat those other two stakeholders.”
“We hassle our portfolio companies once a quarter to try to collect KPIs, and we try to keep that process as light and efficient as possible. We have to remember that we’re not the only investor on the cap table: there are lots of other people who are going to be requesting their own things. So we think really hard about the information that we need and how we can collect it in the best way possible. We use Airtable forms to keep a historic record of all the information, and to sort it out and leverage the insights from that data.”
“I’ve only been into the office twice in the last 15 months, which is pretty crazy. But going forward, I don’t want to be in the office five days a week, and I also don’t want to be at home five days a week. The ultimate balance for me is going to be a mix of the two. I really miss that interaction with work colleagues, but I also love having some time at home to do deep work and not be distracted. I’ve benefited a lot from that, but [when I wasn’t going in at all] I found it difficult to create that work-life separation.”
“We collect five main KPIs for companies: revenue, cash flow, burn, headcount, and a secondary KPI that can change over time. It might start with users, and move on to how much new business they’re landing each month, or how many customers are coming into a trial. We invest across a variety of different sectors, so the secondary KPI is going to be unique to the company: different things are relevant to different companies.”
Learning what — and how — to delegate
“Delegation is something I’ve found really hard. After being the sole finance person [at Connect Ventures] for three years, I found it difficult to give up things that I was used to doing. My nature was always to pick it up automatically. And I really liked doing some things, like portfolio and outcome modeling. That was my baby that I didn’t want to hand over. But you have to hand this stuff [to new people], not only for their own development, but so you can move on and pick up the other things that are expected of you.”
“Connect Ventures is super small. We have seven people, and three of those are the partners. Then we have teams of two who pick up the rest of the slack. So [a new hire] needs to be a good cultural fit for the whole team. We think about what we’re good at and what we’re not good at, and we need the new person to be able to pick up the things that we’re a bit weaker at. You have to be super agile, and prepared to do things that you weren’t expecting to do when you came into work that day.”
“[Data management tools] can’t just be usable for the finance team, they’ve got to be usable for the whole team and the partnership. If the partners aren’t using this product, there’s no point in us using it, frankly.”
“The main goal is to try and free the partners’ time up as much as possible. So we take things away that they were doing, and run with them instead.”
“When you get into competitive situations and need to make a really important decision quickly, our partners’ specializations make them really well-placed to do that. The venture market in general is getting pretty hot right now in Europe, and there are a lot of exciting opportunities that are moving really fast.”
“At the end of the day, the investments are the core part of what delivers value to the firm and to our investors. We actually make relatively few investments a year compared to some of our peers, so we need to be primed and ready to go.”