The Benefits of a CFO Co-Founder in Life Sciences

The Benefits of a CFO Co-Founder in Life Sciences

In life sciences, it is common to see a CEO pick a top CSO (Chief Science Officer) early in a company's lifecycle. It is less clear, however, when a founder should take the leap and bring in a Chief Financial Officer. This article posits that a CFO should be brought on as early as possible in a company's creation stage.

A strong CFO will help a founder with financial forecasting, cost management, tax structuring, governance and investor relations. But a really strong CFO can oversee IT system development, workflows, talent strategy and a host of other critical business functions. Science must marry business for life sciences firms to prosper.

Life sciences start-ups can take 10 years to bring an investigational new drug to market. Accordingly, it is imperative to manage cash resources judiciously and forecast shortfalls accurately and timely. During a 5 to 10 year trial, the cost structure of the firm will become cemented by the norms of daily operations and habit. A strong CFO will help ensure that the cost structure is flexible and matches investors' expectations of risks and returns.

Cost management is not as simple as asking which discretionary expenditures to cut when times are lean. Strategic cost management requires deep thought into how the firm's costs will behave as it scales and how to properly reduce the cost of doing business over time. Key cost drivers in life sciences include the efficient use of R&D budgets, cost sharing through licensing agreements, effective clinical trials strategies and alliances to manage the cost of biomanufacturing, marketing and distribution. High-performance scientists need a solid business partner to ensure the start-up biotech firm is built and scaled effectively.

Many founders also dismiss effective tax planning early on given the size of non-capital losses that often accrue in life sciences firms. Yet that is a mistake too. Tax planning goes deeper than managing taxable income and into the tax optimization of your compensation and talent acquisition programs. If you can't attract talent using tax-efficient capital, your chances of success are reduced considerably. The dominance of Delaware LLCs also requires you to think through cross-border structures and position the firm for strategic transactions such as IPOs or corporate acquisitions.

Financial reporting is another complex area that requires specific financial expertise. When a firm aspires to an IPO, there are broad requirements to build systems that are up to par for audits and SEC disclosure requirements. Often times your venture capitalists will have experience positioning for a strategic transaction but you will need support in the trenches of day-to-day financial management. A strategic CFO provides that support.

Capital markets have evolved with respect to biotechs since the early days of Genentech. The failure of many firms that don't commercialize serves as a reminder of the importance of the relationship between high science and commercial reality, or business. Your CFO should be familiar with capital markets outlooks, investor preferences and minimizing volatility in your share price.

Look, we have a bias, we're CPAs focused on life sciences firms. And we believe that's the level of focus and conviction you want helping you lead your strategy and finances.

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Rebecca Scott
Web Designer

Rebecca is a Web Designer at BluePrint CPAs. She is a graduate of St. Clair College’s Internet Applications and Web Development Program and has worked as a freelance web designer before joining the BluePrint team.

BluePrint CPAs is a management consultancy that simplifies digital, financial and talent strategies. Our team helps entrepreneurs and their teams grow profitable and modern businesses.

Kit Moore, BluePrint CPAs President & Lead Tax Advisor
Kit Moore, CPA, CA
President & Lead Tax Advisor

Kit Moore, is an entrepreneur that simplifies digital strategy for other business owners. The team at BluePrint CPAs can assist you with web design, development, analytics, management systems and, more importantly, your overall business strategy. The toughest part of digital transformation is re-training your team - and we have pros to help with that as well.

BluePrint CPAs is a management consultancy that simplifies digital, financial and talent strategies. Our team helps entrepreneurs and their teams grow profitable and modern businesses.

Kit Moore, BluePrint CPAs President & Lead Tax Advisor
Kit Moore, CPA, CA
President & Lead Tax Advisor

Kit Moore, is an entrepreneur that simplifies tax and financial strategy for other business owners. The team at BluePrint CPAs can assist you with financial technology, tax strategies, mergers & acquisitions, succession & exit planning and, more importantly, your overall business strategy.

BluePrint CPAs is a management consultancy that simplifies digital, financial and talent strategies. Our team helps entrepreneurs and their teams grow profitable and modern businesses.

Joe Marra, MBA
Senior Associate, Strategy Consulting

Joe is a Senior Associate, Strategy Consulting at BluePrint CPAs. He is a recent graduate of the MBA Program at the Schulich School of Business and has most recently worked for Bayer Inc and the Ford Motor Company of Canada. His experience in marketing, sales, and human resources spans various industries including hospitality, logistics, life sciences and automotive manufacturing. Joe loves working with entrepreneurs to develop their digital strategies and help them grow their business.

BluePrint CPAs is a management consultancy that simplifies digital, financial and talent strategies. Our team helps entrepreneurs and their teams grow profitable and modern businesses.