Karthik is experience rich yet very humble and down to earth! He was kind enough to instantly agree for a 30 minute call despite his busy schedule, like most other finance folks! What stands out in Karthik is his transformational journey from TCS to Oracle – all the way to scaling a startup like Chargebee!   About the call 30 minutes was too less for this call, so we asked him specific questions and tried to extract as much info as possible! Detailed notes What are the sub-functions within FLC Controllership FP&A Legal (409A, Customer Contracts) Key Financial Metrics that you track for yourselves? Burn Efficiency New ARR Runway Granularity is important in Expense Reporting Standardize & Categorize the ledger names into something as follows: Employee Costs Legal & Consultancy Software Expenses Program Costs Utilities Travel Staff Welfare Others Add more dimensions to the CashFlow Report ‍ ARR – What’s included Principle- Assume that Transaction Revenue & Metered Revenue of a particular month will recur at the same amount at least.Eg: If we are earning Transaction Revenue in Jan and next is expected in May, then income of Jan should be spread across Jan-April. Subscription Revenue – Included in ARR One Time Revenue – Not Included in ARR Transaction Revenue – Included in ARR Usage Based Revenue – Included in ARR (Metered Revenue) Prepaid Expenses For material items (say >$1000) Prepaid expenses is booked and amortized on a monthly basis. Similar to Deferred Revenue. ‍

About Kanishka Kanishka, a Chartered Accountant is different from others. He is very keen to improve his network & continuously tries to upskill and keep himself relevant. His career in the startup space is a testament to this.He has held various roles in finance and accounting at several different companies. He started with Due diligence in KPMG, then was “one among the thousands” in Honeywell automation, to moving back to another big 4 (PWC) for Assurance and then finally settling down in startups like Synup, Salesken and Corestack.  His responsibilities include managing financial statements, budgeting, fundraising, financial analysis, and engagement teams. He has also worked on business development and improving control processes, and has experience with audits and reviewing financial statements. He has a strong skill set in the finance and accounting field and has taken on increasing levels of responsibility in his roles. ♥ Finance Function in SaaS companies What most people don’t realise is that Finance is much larger than accounting & compliance. In the early stage, accounting is a priority because of annual audits or compliances but finance as a function is not given due importance. However, it’s important to understand that the Finance function can actually foster a company’s growth. Startups focus on managing the finance only once they get VC funded. There is a shortage of relevant finance talent for SaaS since most of the CAs or Commerce professionals are in traditional areas of bookkeeping, taxation and audit. Hence their understanding of the space is limited. Things have improved in the last few years & it will take a few more years for the Indian market to mature. Kanishka got trained in the space by Rohit in Synup, and now passes on the learning to his teammates in Corestack. This cycle goes on this way in Geometric progression VCs generally insist on someone in-house to manage the finance function, even if part of it is outsourced ‍ ‍ Generally Founders take the onus of spending their time in the finance function. Founders generally work on getting the numbers for MRR/ARR – This becomes a tiresome job once the number of customers increase. Some companies in this phase don’t do the accounting in the right way – which eventually bites them back when they want to take investments. They have to clean the data again during due diligence. Companies with more than $1M ARR | Series A funding Finance team is built out with maybe 2-3 people in the finance function Accounting/Ground work is generally outsources to third party vendors. Vendors are either taken from founder network or investor network. For example, Sequoia or Accel can refer finance partners to its portfolio companies. Companies with Series B Funding Hire a CFO and have a finance team Where do we find Finance Leaders all in one place Finance leaders are beginners when it comes to networking. It’d be a great idea to bring them all in one place. We could host webinars for startups, but getting good audience to listen to it is not easy. ‍

Eeshan’s Journey from Non-SaaS to SaaS Eeshan Dadheech, who was an avid reader of SaaS, always wanted to work towards it. However, his non-SaaS background curbed his growth. Despite initial challenges, he kept looking for jobs in the SaaS vertical and landed his first job at Dropsuite, a SaaS company that offers backup and archive services. It’s been six months, and now he works there as an International Finance Manager. His task revolves around FP&A (Financial Planning and Analysis) and providing management accounting insights to the CFO. About Dropsuite Dropsuite is an international database backup and monitoring software provider. It’s a small company with 95 accounts globally and remote operations worldwide. They only have physical offices in Singapore and Indonesia. It is a listed company on Sydney’s stock exchange, operating on a 20 million ARR business model. They offer backup and archive services to B2B companies on a reseller basis. What Does Dropsuite’s International Finance Manager Do Every Day? SaaS is a poorly understood field even today, but Eeshan feels that if you want to learn extensively about anything, join a SaaS company. He did it six months ago, and he loves it. As a Finance Manager at Dropsuite, Eeshan’s work is no longer immersed in accounting tasks. He looks after the company’s FP&A (Financial Planning and Analysis) and provides management accounting reviews to the head team. His role demands that he analyze performance against forecasts and budgets, conduct revenue analysis, track monthly subscriptions, and evaluate regional performances. He also loves educating department heads on their P&Ls, helping them identify cost gaps, and addressing areas of excessive spending. He also helped the company with headcount planning. When he first joined, there were no checks on departmental accounting, but with him, the company started tracking their departmental accounts. How can headcount planning favor SaaS startups? Headcount planning, put simply, is planning holistically and considering the employee’s life cycle. For this reason, departmental P&Ls are important to develop a comprehensive view of the company’s financials. For Eeshan, headcount planning is much more than just aligning people. For him, it’s looking at the employee’s life cycle. For example, if you are hiring consultants, you need to keep in mind the associated costs like laptop costs, joining bonuses, relocation costs, etc. He educates about approaching headcount planning holistically, taking into account all the related costs and factors throughout the employee’s journey before hiring them to make informed employee choices. What Tech Stack Dropsuite Uses As a software provider, Dropsuite uses different tech stacks for its daily tasks. They depend on Xero for Accounting, and Salesforce for top-line planning. All this software is integrated but not optimized. Most of their tasks are done through spreadsheets. However, they are planning to onboard a new software called Mosaic Tech for their financial planning. How Does Dropsuite Manage Compliance? Eeshan believes that instead of doing everything alone, it’s best to hire individuals who make your task easy. Therefore, they risk outsourcing their compliance to specialized consultants. They help them stay up-to-date with legal changes, such as the tax requirements of a specific area. What are some challenges you have faced with CA firms? Eeshan feels that traditional CA firms lack the necessary training and motivation to excel at providing comprehensive services for businesses. He sees management reporting as a significant differentiator for Zuna compared to CA firms, as they go beyond basic accounting statements and provide in-depth analysis and forecasting. He believes that creating tailored KPI templates for each business is an actual game-changer that most CA firms don’t utilize. Eeshan sees that CA firms have an attitude problem. They don’t go out looking for businesses. Most of their clients come to them. Even if we talk about upskilling their workforce, they are adamant. The workforce there doesn’t want to be trained. They are happy with their existing clients and don’t wish to learn new things. Eeshan explains that CA firms are only concerned with their work. They do your accounting, send you the statement of profit and loss, send you the cash flow and balance sheet, and then they are done. That’s the biggest difference between a traditional CA firm and companies like Zuna. He further perceives that CA firms just don’t want to scale up. As their staff is quite transactionally trained, they are happy working with their B2B clients and don’t wish to learn how other companies, like SaaS or IT, work. ‍

Finance is often seen as the backend and the last thing people cheer about. However, it plays a crucial role in any business and startup and can be the difference between success and failure. This blog will have an exclusive interview with Anand Mundra, a Finance Controller with Sage, an FTSE 100 company on the London Stock Exchange.   Anand takes us on a journey through his career, sharing insights on his experience with Deloitte, BrowserStack, Lockstep, and his current role at Sage. He also shares his thoughts on the unique challenges of SaaS finance and how he balances his responsibilities in strategic reporting, financial reporting, compliance, and bookkeeping. Join us for an inspiring and informative conversation on finance and startups with Anand Mundra. The Journey Meet Anand Mundra, a finance controller with Sage, a well-known FTSE 100 company with 15,000 employees. Anand’s journey into the finance space started eight years ago, and it has been an exciting ride ever since. Anand began his journey as an auditor with Deloitte, giving him a solid auditing base. His time at Deloitte gave him an excellent foundation; he worked there for five years. Finally, however, he was ready to move on to something new. Anand’s next step was to move to a promoter company of the TATA group. With a move from Consulting to Industry, this opportunity allowed him to gain more knowledge and experience in finance. First, however, he was willing to learn more about companies’ operations, so he joined BrowserStack. That was one of the best learning experiences of Anand’s career. At BrowserStack, working for the controllership function allowed him to learn more about how SaaS companies operate and work. In January 2022, Anand moved to Lockstep, a SaaS-based company based in the US and entities in India. Lockstep was in talks for funding, and it eventually got acquired by Sage Group PLC in London. This acquisition process was like a roller coaster ride, with due diligence and agreement finalisation being the significant milestones. Currently working on the post-merger integration of Lockstep into Sage, he plays a pivotal role in ensuring that the business functions of both companies are integrated seamlessly. The post-merger integration involves much work from the finance point of view because finance is a priority between the business of the company and the management of the other company. Exploring the World of Finance According to Anand, finance has come a long way from bookkeeping and audits. Finance plays a crucial role in ensuring a company’s financial stability and growth. In today’s world, it encompasses a much more comprehensive range of functions such as strategy, accounting, financial planning & analysis, treasury, and tax. However, the size and nature of a company still play a crucial role in determining how many sub-functions under the finance umbrella are required and how they should be structured. Finance in SaaS Companies When it comes to SaaS companies, finance takes on a unique role. As Anand explained, SaaS and financial metrics are two of the most critical areas finance needs to focus on. In India, SaaS companies are relatively new; most are startups, with some even becoming unicorns quickly. Therefore, it becomes crucial for them to maintain proper records of financial and SaaS metrics. Understanding SaaS Metrics SaaS metrics refer to the key performance indicators (KPIs) that measure the performance of a SaaS business. These metrics include but are not limited to Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), Churn Rate, Net Dollar Retention (NDR), Logo Retention and Customer Satisfaction (CSAT). MRR and ARR represent the revenue generated from the subscriptions. CAC and CLV measure the cost of acquiring a customer and the lifetime value of a customer, respectively. The churn rate is another crucial metric that measures the percentage of customers who cancel their subscriptions. High churn rates can be detrimental to a SaaS business, so keeping track of this metric and taking corrective actions if necessary is vital. Finally, CSAT is a metric that measures customer satisfaction and loyalty, which is crucial for the long-term success of a SaaS business. Financial Metrics in SaaS Apart from SaaS metrics, financial metrics play a critical role in the success of a SaaS business. The financial metrics that SaaS companies must keep track of include revenue, gross profit, operating expenses, net income, and cash flow. Revenue is the amount of money generated from selling software subscriptions. Gross profit is the revenue minus the cost of goods sold, which includes the cost of serving the paying customers. Operating expenses are the costs associated with running the business, such as salaries, rent, and utilities. Net income is the profit after deducting all expenses from the revenue. Finally, cash flow is the cash in and out of business. Working in SaaS finance requires a combination of business acumen, experience, and exposure to the industry. While some people may understand SaaS metrics, it’s crucial to deeply understand how these metrics apply to the business. Therefore, it’s essential to have a team of finance professionals who are well-versed in SaaS and financial metrics. The Difference between Established and Startup Companies Anand also sheds light on how finance works differently in an established company than in a startup. In a conventional well-established company, many things are already streamlined, and the finance function is well-established. However, in a startup, one must figure out many things independently. There is no set structure, and finance functions must be created from scratch. It’s a challenging but exciting experience that requires creativity and innovation. The Importance of Maintaining Records Maintaining proper records is crucial regardless of the size and nature of a company. It helps make informed decisions, meets regulatory compliance, and monitors the company’s financial health. In addition, by keeping a proper track record, companies can optimise their business processes and improve their financial performance. Significant Challenges Faced in SaaS Finance Startups Working in a startup can be an exhilarating experience, but it also

How Aditya Singhal thrives in dynamic environments! Intro Aditya is a Chartered Accountant with over 20 years of experience. He has hands-on experience in both corporate as well as startup finance. Career After obtaining his CA certification, Aditya started his industrial journey in 2002 with IBM. He helped IBM with its budgets, automation, cost efficiency, and financial analysis. That gave Aditya a neat experience of how MNCs worked, the pluses and minuses, and more importantly, the “industrial experience” of life. After working at IBM for 3 years, he then started working with Xchanging as an Assistant Finance Controller, where he would deal with the US finances. He continued to help Xchanging for 4 years. That’s where Aditya had his first lesson in controllership, which he really enjoyed doing. After a year of helping Symphony Teleca with its Operational Accounting, Aditya joined hands with HSBC India. He was there for more than 9 years, and he worked in many countries like Singapore, Hong Kong, and many others. That gave him a global perspective and the best practises worldwide, and it also gave him the experience of leading teams. After 18 years of corporate experience, he wanted to explore the startup world, wanted to challenge himself, and hence joined Spyne and currently heads its finance. ⭐ In his 20 years of career, he has made one point clear- there’s no age or time to do what you want to do. About Spyne Founded in 2018, Spyne helps businesses create high-quality product visuals at scale with AI. Spyne empowers car dealers and marketplaces to build consumer trust by creating engaging catalogues at scale within seconds. When should a startup have a finance team? Aditya explains how corporate finance and startup finance are at opposite ends of the spectrum. He tells us that, at a startup, finance is like a partner, and this function in a growing startup is more than just “compliance”. According to Aditya, startups must bring in a finance guy at the time of raising funds. The reason being that finance as a process isn’t just a “plugin-plugout” game. You have to change your mindset; you have to set up a process; you have to build a team; and you need to leverage the technology. ⭐ The reason being finance as a process isn’t just a ‘plugin-plug-out’ game. What to look out for while outsourcing/appointing a consultant? While appointing a consultant or outsourcing some finance tasks, Aditya majorly looks out for: the other person’s commitment level, their hunger to learn and get things done, their services and skillset, and their commercials He says- until and unless someone’s services and commercials aren’t good enough, they cannot go a long way. ⭐ “Your services will get you opportunities, and your commercials will help you stay stable”. How finance is managed? At Spyne, Aditya, the head of finance, likes to have routine work related to business finance in-house. The reason for this is that these tasks necessitate a day-to-day understanding of what the business requires. Besides this, he prefers to outsource compliance-related tasks such as GST, TDS, taxes, etc. The reason for this is that most of these tasks necessitate specialised knowledge.He also likes to outsource one-time tasks like TP studies. What does our Finance Rockstar’s day look like? Aditya’s days are very spontaneous, and nothing in his entire day can be predicted, and he loves that about startups Though there is an agenda or a “to-do” list, he says that more than half of the work he does is something he couldn’t predict at the start of the day! He further tells us about his routine from his corporate days, and it turns out he could plan things quite far in advance. Whereas in a startup environment, he can predict only 30% of things around him, and the rest seems to be ad hoc. Something memorable Aditya left us with He says, “when one works, they shouldn’t work for money. Instead, work for the experiences, work for the network, and work for the learning. Money will follow eventually”. Past experience comes only when we have opportunities. And opportunities will come only when we have experience. It’s like a loop but service companies trying to differentiate themselves must try to build both in parallel, and this can be done by networking! Until and unless someone’s services and commercials aren’t good enough, they cannot go a long way. ‍

About Abhishek – Senior Finance Manager at Whatfix Abhishek has a diverse set of experience in Finance while he has worked in multiple companies, right from as an consultant in EY, to a Finance Lead in Synup and a Senior Finance Manager in Whatfix. Currently, Abhishek is trying to give back all his learnings in Finance to other Founders who are starting up. When is the right time to hire a Finance Team in a company? Series A CEOs’ high priority is getting to Product Market Fit and not building a Finance Team Few companies hire someone in Finance, and that too due to investor pressure. Generally, when investors want due diligence – the CEOs have to focus on hiring a third party to clear their data in terms of accounting, compliance and business finance. This can be clearly avoided if all the Finance and Compliance check is already done starting Day 0 Series B Abhishek talks about his experience of seeing a lot of companies hiring an in-house finance team after they raise Series B Outsourcing the Accounting and Compliance Game Generally, Founders are seen to use an outsourced agency ( CA Firm ) for the purposes of accounting and compliance – Abhishek feels that’s the right way to go before the company becomes really large ( Series C + ) In the early stages, These agencies are generally CAs that are referred by other startups or from personal connections Even Whatfix, which has raised a Series D – doesn’t have an internal team for accounting. They have completely outsourced their accounting team and they focus on business finance internally. A good approach would be – Accounting – Outsource as much as possible Compliance – Outsource as much as possible Business Finance – In-house is better Even when functions are outsourced, there must be someone in-house managing the outsourced partner Compliance – Still a grey area for many SaaS startups Secretarial compliance is still a big grey area for a lot of finance folks in the SaaS ecosystem. There are a lot of compliance checks that companies need to be on top of – Since SaaS is still booming in India, there is a lot of opportunity to get better at it with shared learnings A compliance checklist would be super useful for startups in different domains – where Founders can get a list of all the things they need to do with respect to compliance. Vendors in Finance and Compliance There is definitely a big hole in this space. There are not many vendors in Finance who are very well aware of what services are to be specifically offered to each of the founders in terms of both accounting compliance and business finance. Few good vendors Finadvantage – Positive-they have a global presence which means startups like WhatFix work with only one vendor! Guru & Jana JCSS MyStartupCFO ‍