Startup Finance & Accounting 101: A crash course for founders :: with Veronica Sagastume
01/26/22 • 73 min
In this episode of Ventures, my guest Veronica Sagastume (https://www.linkedin.com/in/veronicalsagastume/) and I talk about all-things startup finance and accounting. From the perspective of what founders need to know, this episode ended up being a crash course in the various high-level aspects of bookkeeping, accounting, controller work, fractional CFO work, tax prep, legal considerations, and finance operating suggestions. Veronica’s firm (https://www.fortifiedaccounting.com/) works with funded, early stage startups and she makes a compelling pitch for why you should seriously consider hiring a firm rather than individuals in the early stages of your funded business.
Visit https://satchel.works/@wclittle/ventures-episode-81 for detailed notes and links to resources (videos, articles, etc...) mentioned.
You can watch this episode via video here.
2:47 - Veronica introduction and background, story, and what she does now.
5:46 - What’s the “Finance 101” for startups and when should founders hire help?
11:48 - Last ~5min of conversation is worth re-listening to, but - first question - what is GAAP accounting? https://www.investopedia.com/terms/g/gaap.asp
13:45 - Will Xero or Quickbooks online help entrepreneurs with the basics of GAAP accounting?
16:14 - Suggested order of hires – Veronica suggests hiring a firm and growing into them.
19:14 - Analogy of someone doing a large remodel or construction project.
20:09 - Traction and having the cash is key so you can hire a proper finance and accounting firm.
22:38 - Lessons after 15+ years in the startup space. If you can hire a firm, do it.
23:12 - Importance of having a regular monthly meeting to go over your books. Quick lesson on the P&L (income statement), balance sheet, and statement of cash flows.
28:00 - Amazing to have a group that can get you finished books quickly after the beginning of the month.
31:50 - Coming back to the overall framework: bookkeeping, controller, accounting, “CFO stuff” - does Veronica’s firm do all this? Even tax prep?
33:52 - The role of controller. What does it look like working with Veronica’s firm from the role of the controller.
37:14 - Prepping a company for an exit strategy / data room
41:37 - Data rooms
42:40 - How Veronica’s firm builds data rooms from scratch as they go.
43:20 - How should founders think about finance best practices to be properly compliant.
46:50 - “CFO stuff”
53:03 - Tax prep strategies // what should founders be looking for to ensure their firm is doing the right things?
44:33 - Early November tax strategy meeting / how to work with the tax prep folks?
59:00 - What are the types of things that Veronica will bring in the expert accounting / legal folks?
1:00:41 - Stock options vs. RSUs? https://smartasset.com/investing/stock-options-vs-rsu
1:01:37 - Where can people find Veronica’s firm online? https://www.fortifiedaccounting.com/
1:03:28 - Smart use of Loom videos (https://www.loom.com/).
1:04:50 - About Will (https://linkedin.com/in/wclittle) and Prota Ventures (https://www.protaventures.com). Special focus on idea to pre-seed.
1:09:00 - When is the right time to talk to Fortified Accounting?
In this episode of Ventures, my guest Veronica Sagastume (https://www.linkedin.com/in/veronicalsagastume/) and I talk about all-things startup finance and accounting. From the perspective of what founders need to know, this episode ended up being a crash course in the various high-level aspects of bookkeeping, accounting, controller work, fractional CFO work, tax prep, legal considerations, and finance operating suggestions. Veronica’s firm (https://www.fortifiedaccounting.com/) works with funded, early stage startups and she makes a compelling pitch for why you should seriously consider hiring a firm rather than individuals in the early stages of your funded business.
Visit https://satchel.works/@wclittle/ventures-episode-81 for detailed notes and links to resources (videos, articles, etc...) mentioned.
You can watch this episode via video here.
2:47 - Veronica introduction and background, story, and what she does now.
5:46 - What’s the “Finance 101” for startups and when should founders hire help?
11:48 - Last ~5min of conversation is worth re-listening to, but - first question - what is GAAP accounting? https://www.investopedia.com/terms/g/gaap.asp
13:45 - Will Xero or Quickbooks online help entrepreneurs with the basics of GAAP accounting?
16:14 - Suggested order of hires – Veronica suggests hiring a firm and growing into them.
19:14 - Analogy of someone doing a large remodel or construction project.
20:09 - Traction and having the cash is key so you can hire a proper finance and accounting firm.
22:38 - Lessons after 15+ years in the startup space. If you can hire a firm, do it.
23:12 - Importance of having a regular monthly meeting to go over your books. Quick lesson on the P&L (income statement), balance sheet, and statement of cash flows.
28:00 - Amazing to have a group that can get you finished books quickly after the beginning of the month.
31:50 - Coming back to the overall framework: bookkeeping, controller, accounting, “CFO stuff” - does Veronica’s firm do all this? Even tax prep?
33:52 - The role of controller. What does it look like working with Veronica’s firm from the role of the controller.
37:14 - Prepping a company for an exit strategy / data room
41:37 - Data rooms
42:40 - How Veronica’s firm builds data rooms from scratch as they go.
43:20 - How should founders think about finance best practices to be properly compliant.
46:50 - “CFO stuff”
53:03 - Tax prep strategies // what should founders be looking for to ensure their firm is doing the right things?
44:33 - Early November tax strategy meeting / how to work with the tax prep folks?
59:00 - What are the types of things that Veronica will bring in the expert accounting / legal folks?
1:00:41 - Stock options vs. RSUs? https://smartasset.com/investing/stock-options-vs-rsu
1:01:37 - Where can people find Veronica’s firm online? https://www.fortifiedaccounting.com/
1:03:28 - Smart use of Loom videos (https://www.loom.com/).
1:04:50 - About Will (https://linkedin.com/in/wclittle) and Prota Ventures (https://www.protaventures.com). Special focus on idea to pre-seed.
1:09:00 - When is the right time to talk to Fortified Accounting?
Previous Episode
Decentralized Autonomous Organization (DAO) operations and logistics on DAOHaus :: with Alex Zub and Spencer Graham
In this episode of Ventures, my guests Alex Zub (https://twitter.com/theAlexZub), Spencer Graham (https://twitter.com/spengrah), and I talk about the details of day-to-day “DAO life” on DAOHaus (https://daohaus.club/). We talk specifically about how Raid Guild (https://www.raidguild.org/) - a services DAO - manages proposals, escrow, billing, and bridges to the traditional finance system. We also talk about short-term and long-term financial incentives for DAO founders/participants, how DAOs can quickly raise funds and manage risk/assurance/trust, and how newcomers to DAOs can/should think about how to participate to create maximum value for themselves and their communities.
Visit https://satchel.works/@wclittle/ventures-episode-80 for detailed notes and links to resources (videos, articles, etc...) mentioned.
You can watch this episode via video here.
2:38 - Background and tee-up for the conversation; Alex has a bunch of questions about Raid Guild and we figured we’d record it for everyone’s benefit.
3:20 - Alex intro / background (full-stack engineer, turned management)
5:50 - Spencer’s description: “What is a DAO?” (From “group chat w/ a bank account” to more) - plus, information about how Raid Guild splits their revenue (90% to team, 10% to treasury)
11:08 - Is there a founder of Raid Guild? How did the letting go of control happen? How did Raid Guild Start?
13:04 - Showing the dashboard of the Raid Guild DAO on DAOHaus
14:49 - When someone new joins, does that create new shares?
16:30 - Seeing the list of members in Raid Guild
17:30 - Is there such a thing as a partial rage quit? (i.e. sell part of his shares).
18:14 - What are all the types of proposals that people can propose in DAOHaus DAOs?
20:50 - Smart escrow https://smartescrow.raidguild.org/
22:25 - How does a proposal outcome get enforced / QA control?
23:02 - Guild kick (booting someone out)
23:40 - Assurance for client and service provider via escrow-type services on-chain
24:12 - Smart invoice https://smartinvoice.xyz/
26:39 - Court on-chain (LexDAO, Kleros Court, etc..)
29:20 - How to deliver a project w/ scope in tranches using Smart Invoice
31:34 - Advantage of a service DAO, Raid Guild in particular.
33:35 - Long-term economic incentives for moloch-type DAO participants.
36:55 - What are loot shares?
37:29 - If a DAO decides to allow their shares to be transferable - the peg to a specific value would go away.
40:20 - Besides pegging a token to governance, what other types of tokens are there? https://satchel.works/@wclittle/a-primer-on-blockchains-protocols-and-token-sales (Utility token, work token, etc...)
42:45 - Yeeting (easy way to raise funds for a DAO) → https://twitter.com/nowdaoit/status/1483463413464502277
44:20 - Off-chain to on-chain bridging - web3 to traditional - does Raid Guild work w/ “off-chain” customers?
46:11 - Off-chain operations for raid guild via a standard reimbursement policy
47:00 - Where can people find Alex and Spencer to continue the conversation? https://twitter.com/theAlexZub & https://twitter.com/spengrah
Next Episode
Unlearning racism in venture building & investing :: with Lindsey T. H. Jackson
In this episode of Ventures, my guest Lindsey T. H. Jackson (https://www.linkedin.com/in/lindsey-t-h-jackson/) and I discuss the journey of anti-racism and anti-oppression work in ourselves, in venture capital, and in startup ecosystems. We discuss the nuances of dismal representation numbers in venture; how to approach Diversity, Equity, and Inclusion (DEI) conversations in the workplace and beyond; how to develop a regular practice to self-reflect, define your community, and “fail fast” on your own anti-racism journey; and how to encourage others to consider embarking on the journey themselves.
Visit https://satchel.works/@wclittle/ventures-episode-82 for detailed notes and links to resources (videos, articles, etc...) mentioned.
You can watch this episode via video here.
3:18 - Lindsey’s introduction, background, brief story, about LTHJ Global (https://lthjglobal.com/)
10:30 - What got Lindsey into DEI (Diversity, Equity, and Inclusion) consulting work?
13:30 - DEI & anti-racism work as intriguing to all entrepreneurs (it’s about collecting and responding to data, to work safer and smarter)
14:34 - Will’s journey coming from graduate work in a bioengineering lab, gathering and responding to data, influence from Dr. Viola Vogel as he got into venture building & investing.
17:13 - Common references to The Matrix in DEI work, why people ignore data, and listening to the market.
20:20 - Companies that make great products are made up of people. Importance of unlocking greatness in people.
20:56 - More diverse companies perform better. (Check out: https://www.marketwatch.com/story/the-numbers-dont-lie-diverse-workforces-make-companies-more-money-2020-07-30)
21:56 - Unlearning racism; reflections from Will’s personal journey
23:54 - How does Lindsey start the conversation without triggering people who think differently?
28:30 - “Calling in” (instead of calling out)
29:19 - Shockingly bad statistics regarding diversity in venture (see: https://www.wired.com/story/vc-pledged-better-diversity-its-barely-changed)
30:24 - “Do a count in a given day: How many people do you engage with that are outside of your intersectional identity”
30:57 - Identity as “Black”
32:52 - Dismal numbers in terms of percent of VC dollars going to businesses owned by black women.
36:04 - Cognitive diversity
36:29 - Recommended next steps to begin an anti-racism journey
47:32 - For people on their anti-racism/anti-oppression journey, what is Lindsey’s recommended way to talk about this with others and/or publicly?
51:15 - By the age of 5, black and brown children experience racism 5x/day, which increases in frequency as they get older.
51:11 - “How do I know I’m moving forward?”
54:00 - Consider the venture of anti-racism. Consider unlearning racism as joyful and freeing.
56:05 - By nature, anyone who considers themselves an entrepreneur is well poised to unlearn racism.
56:46 - Lindsey’s work: https://lthjglobal.com/ // https://www.linkedin.com/in/lindsey-t-h-jackson/ // Reach out and book her for a speaking gig // Subscribe to learn more about her upcoming book “Unlearning Racism” → http://eepurl.com/htLZyv
If you like this episode you’ll love
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