There’s no one who knows a company’s inner workings like a chief financial officer. So, when three high-profile CFOs leave their jobs at richly valued, late-stage startups in quick succession, we notice it.
This week, OpenSea CFO Brian Roberts left the web3 company less than a year after taking the job. Days later, Brex CFO Adam Swiecicki left the expense management company to join Rippling, another company that recently expanded into the expense management space. The shuffle came on the heels of Brex announcing it had to slash 11% of staff. (Its former CFO, who stepped down so Swiecicki could take the helm, is back in his original position).
“The first person who is going to know if it’s possible to grow into these valuations is the CFO.” Continuum CEO Nolan Church
But that’s not all. Noom, a diet and health coaching platform, confirmed that its CFO, Mike Noonan, is leaving the job two years after joining, hours before TechCrunch learned that the company was executing a round of layoffs.
While the CFO departures are reportedly unrelated to the layoffs, is anything ever that simple? After all, layoffs were a result of needing to strengthen financials ahead of an uncertain market, quite literally the job of a chief financial officer.
There are a couple of ways we could analyze these job moves, but before that, some context. When a company hires a CFO, it usually means that they’ve hit a certain level of financial maturity. If a company wants to start acquiring other startups or go public, a CFO is often desired to help it navigate regulatory and financial red tape.
When a CFO leaves, it’s complicated. People leave jobs for a variety of reasons. In these cases,
We don’t know if executive resignations were voluntary or involuntary, but companies like Hopin and Latch showed us that rocky times can often include a CFO departure.
Continuum founder and CEO Nolan Church is trying to connect startups to part-time executive help, a play that helps tech companies fill key gaps during crucial moments and build more sustainably. He said that a CFO departure is a “really negative signal to the market, the candidate market specifically.”
“What I would say is weird about these cases is the commonality between all these companies raising at a very high valuation during the peak VC bubble of 2020 and 2021,” Church said. “The first person who is going to know if it’s possible to grow into these valuations is the CFO.
“We don’t know what happened, but if it was me, and I’m evaluating these businesses as a potential candidate, one of my first questions is going to be, hey you were priced in 2021 at the peak of the VC bubble … what is my equity actually worth?”
In this case, we can gain some signal from where the CFOs are going next. Roberts is taking on an advisory position at OpenSea, reports say, with no clear answer on his next job. Swiecicki is joining a Brex competitor valued at $11 billion, and Noonan is joining Tripadvisor, a publicly traded company nowhere close to the consumer health space he was once invested in.
On the IPO front, we can’t exactly say what this means for OpenSea, which walked back its IPO plans after community frustration, and Brex, whose co-CEO told journalists in March that there would be no IPO anytime soon. Noom is a different story. The company was reportedly planning for a 2022 IPO at a $10 billion valuation.
With only months left in the year and a missing CFO, it’s fair to say that Noom will have to clear a lot of hurdles to still make that timeline. A spokesperson from the company didn’t comment on the IPO timeline when asked, but we’ve seen IPOs delayed for much vaguer reasons.
Church noted that no companies are really thinking about IPOs right now, anyways, due to the softening late-stage markets. If the CFO spot at Noom stays open for another six to 12 months, it could be a red flag; but until then, the co-founder described how CFOs can sometimes be the perfect role to do fractionally.
“It’s the perfect role to do fractionally because oftentimes, you’ll have somebody on the finance team who is more tactical and then you can leverage the fractional CFO to help guide the strategy of the organization,” Church said, adding that late stage companies should definitely have a full-time CFO.
As for whether the departures are an inflection point for a company beginning to deal with internal tensions or simply businesses resettling into a new normal amid a changing market, we don’t yet know. All I do know, though, is I’m happy to not be a CEO in charge of reorganizing a staff after layoffs, executive departures and market volatility.