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Finance professionals understand economic realities better, and so make great founder – says Amit Kumar Agarwal, co-founder of NoBroker

Co-founder of NoBroker Amit Kumar Agarwal, explains why finance professionals are reluctant to start a business yet they make the perfect co-founder for a startup. He is both an IIT and IIM graduate.

Preeti Mondal by Preeti Mondal
Published date: 17th October, 2022
Last edited date: 24th June, 2023
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Finance professionals understand economic realities better, and so make great founder - says Amit Kumar Agarwal, co-founder of NoBroker
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Finance professionals understand economic realities better, and so make great founders.

Amit Kumar Agarwal, co-founder of the proptech platform, NoBroker believes a strong background in finance is an added advantage when it comes to running a business.

He spoke to The Finance Story as part of the Finance: 2022 and Beyond series, powered by Qapita – CapTable and ESOP Management Platform.

An IITian who also has an MBA in Finance from IIM-Ahmedabad, Amit shares some relevant insights from his own journey at NoBroker that could also double up as pertinent advice for aspiring entrepreneurs.

Q. Please take us through the journey of creating the Finance team of NoBroker.

A. As first-generation entrepreneurs, we were clueless as to what the thought process of a founder should be like.

Like many new startup founders, we also asked the wrong question “Is there enough work for an HR professional or a finance professional for a full-time position?”

Thus, for the first six months, we deemed it unnecessary to hire an HR or a finance professional, for an emerging company. 

But soon, we realized it didn’t matter, if it is an early-stage startup, the value that a finance expert can bring to the team is unmatched. Looking back, I think we should have hired them comparatively sooner.

Since we are not aware we forget to pay attention to a lot of things that are crucial for the startup’s growth. And it costs us a lot in the process.

You need a suitable person to take care of those things.

After those initial six months, we started hiring junior finance professionals, which was a very bad call on our part.

We did not have any clue as to what types of questions we should ask our interviewees.

That is why sometimes we used to ask our investors to send us technical interview questions for the candidates.

­Down the line, we hired Ashish Shand, for a mid-level finance role. It was one of the best decisions that we took.

We completely relied on him, and he handled everything like a champ. He learned how to keep up with the fast-paced environment of a startup. Then slowly, then he started hiring junior people.

Running a business in India requires close liaison with the Municipality, police, Income Tax department, and whatnot.  Ashish learned how to handle these functions effectively.

Soon, we promoted him to head of finance.

Q. What makes a good startup CFO?

A. We could divide a CFO’s job responsibilities into two areas of responsibility, managing cash, and information.

But after these two conditions are met, what matters the most is their intent.

Is he capable of taking up other roles also in the startup?

Will he be satisfied with just the 30-40 percent increment that the startup has to offer?

Can he keep up with the chaotic startup environment and be on his toes all the time?

If the person you are interviewing says yes to all of these, then bingo! You have just found the biggest asset for your startup.

Q. Do you think startup founders should consider outsourcing CFOs or seek the assistance of consultants for their startups?

A. I believe it is a personal choice. It depends on the person whom you are hiring.

In our case we hired Ashish for a mid-level finance role, then he eventually grew in that role and got promoted. Coming from ITC, an established company, where there is a hierarchy of finance itself, he did adapt to the action-packed environment of a startup.

Here, he could turn to a senior finance professional to ask questions and clear his doubts. He had to take care of a lot of things that he had not done before.

He even learned how to hire employees for the first in his life, albeit some of the new hires were not quite up to the mark. But he learned eventually.

Running a business in India requires close liaison with the municipality, police, income tax department, and the Employees’ Provident Fund Organisation (EPFO) to name but a few.  Ashish learned how to handle these functions effectively.

Q. Do you see a lot of finance professionals becoming co-founders in the future?

A. I would say many finance professionals are suitable to become Co-founders.

They can run a business and many of them do already.

The advantage of running a business as a finance professional is immense.

Why is that? Because he is much more attuned to the economic realities than founders who do not have a strong background in finance.

Apart from enquiring about the product the most common thing an investor is going to ask you is “What is your unit economics?”

Also, “How is everything going to pan out over the course of five years?”

A finance professional has a great understanding of the relationship between balance sheets and profit and loss (P&L) accounts, how margins work, or how things are going to pan out. These are the aspects an investor looks for in a founder.

But if it is a tech-driven business then having a co-founder with a solid tech background would make a lot more sense I believe. Nowadays, you will see that most IITians becoming startup founders when compared to IIM graduates.

From my IIM batch also, there were only two or three graduates who went on to start their own companies. Because they mostly end up chasing salaried jobs.

But they should take more risks.

Now the question here is “Is a person who has graduated from both IIT and IIM less equipped to start something of his own, compared to just an IITian?” Of course not. The previous one has the upper hand here.

Similarly, a finance professional is more qualified to start something of their own. But I think something in their mind is keeping them from going forward.

In fact, they are more attuned to the economic realities and better at handling investors.

I am anticipating that just in a couple of years, three or four CFOs will take the startup route, and then the trend will catch up.

It is just a matter of time.

Q. What are your thoughts on ESOPs?

A. I remember telling somebody that ESOPs are like seeds of fruits. If you allow the tree to grow, within 5 years, you would notice how the tree has blossomed and the amount of fruits the tree has grown.

We recently did a secondary sale for some of our employees and people who have been with us for the longest time.

So, the employees who stayed with us for the last five years through thick and thin are now enjoying the fruits of their labor.

Q. What is your advice to other startup founders who are building a finance team? Should they hire a finance controller or a CFO early on?

A. To everyone who is reading this, treat the area of finance as functional expertise, which is gathered over time with the help of deliberate practice, and experience.

Never make the mistake of saying that you can manage a critical issue as a semi-expert, which requires years of training.

Just as an engineer plays a huge role in your startup team, having a good finance professional in your team is also quite like having a good co-founder.

He would make sure that the basic structure of the company is well-grounded and would prepare the company for future crises.

Finance professionals have a greater understanding of GST, income tax, and many other complex finance functions.

Most importantly, a good finance person grows as the startup grows, and develops a huge amount of love and affection for the company.

Therefore, the aim is to find a finance expert who eventually becomes a companion in your startup journey.

Preeti Mondal

Preeti Mondal

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