It’s Just a Bunch of Numbers

When I was in college, the brothers in my fraternity would formally meet for dinner on a weekly basis (and we generally would not be welcomed back to that establishment). Now that we’ve graduated, matured and have full-time jobs, we get together for dinner only once each quarter. And for some reason, there’s an ongoing joke that we are board members of a fictitious company. So, to keep the joke going, I created a board deck for our 1Q17 meeting. Below is the slide that summarizes the financial situation of the company. 

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While this next comment may seem a little harsh, it’s meant to be an exaggeration: At the end of the day, the financial forecasts that I come across are just a bunch of numbers. Of course, there’s often a ton of thought and logic behind the numbers, but if the financials are forward-looking, nobody really knows how accurate they actually will turn out to be. And as others have pointed out, we don’t necessarily expect your numbers to be accurate. More importantly, I strongly prefer to work with financial models that are:

  • Easy to follow and understand
  • Dynamic and informative
  • Reflective of the entire organization’s initiatives

Hall of Mirrors vs. CEO Math

At Edison, we engage entrepreneurs an average of 29 months prior to our initial investment. That means they generally don’t have a CFO upon first getting to know them. So, the CEO very well may be handling the Finance function, which is why the company’s receipts are stored safely in a shoebox and the financial model is maintained on a piece of graph paper – aka “CEO Math.” On the other end of the spectrum is an ambitious finance professional who has created a robust model with 50 tabs, each cell referencing the 50 other tabs (and for some reason, it has dollar signs and something called “SUMIFS”). When the model gets to be that complex, as a fellow co-investor puts it, “you can get caught up in a hall of mirrors.” Essentially, the numbers float from tab to tab, and if there is an error within the model, good luck finding it. Personally, I don’t mind the hall of mirrors, but I’m not the only person reviewing the model. So, I’ve found it paramount to find an equilibrium between CEO Math and a Hall of Mirrors to create a financial model that both represents the detailed activities of the company, but is simple enough for non-finance executives to work their way around.

What happens if…

I’ve had the opportunity to review a financial model with both external (Edison Partners) and internal parties (the Management Team), so I’ve posed and fielded questions from both perspectives. From both angles, the questions generally start with “what if…” For internal purposes, the model needs to be dynamic. What I mean by that is if I change the sales team’s assumed quota attainment rate, I expect to see the impact to revenue, cash, AR, deferred revenue, sales commissions, and if you’re an all-star, the marketing funnel and hiring plan. When sharing your financial plan externally, I recommend following the KISS Principle. Print the forecast to PDF, review the plan to ensure it makes sense from a high-level, do a few sanity checks (does the balance sheet balance?) and anticipate those “what if” questions from external reviewers. And whether I’m reviewing the model through a static PDF or a dynamic excel workbook, I want to be able to see the entire company’s story.

Is that a financial plan or an operational plan?

One of my big breakthroughs in understanding the purpose of a model was when Kelly Ford critiqued one particular company’s: “It’s a financial plan, but it’s not an operating plan.” When I listen to a CFO describe their financial plan, I’m generally thinking about financial metrics: revenue, EBITDA, cash burn, and, if applicable, SaaS metrics. But that’s just the output of the model. Financial statements represent a language that we use to communicate a company’s performance, but they don’t provide enough depth to have a full understanding. Linking the financial plan to the operating plan (and ultimately, the company’s strategic plan) is essential to driving organizational alignment. The CFO needs to proactively meet with the heads of Sales, Marketing, Product, and Operations to ensure accountability for specific contributions that are interdependent within the company’s financial model. A dynamic model will communicate what happens when those specific contributions are not made.

And regardless of the fact that your financial projections are just a bunch of numbers, be careful about who you are showing those numbers to. Who knows? The financial forecast could get leaked and end up in my fraternity’s second quarter board deck…

The post It’s Just a Bunch of Numbers first appeared on Edison Partners.

CFO Transparency: Should We Be Talking About That?

At Edison, we talk about transparency A LOT; we value it and pride ourselves on it. So, let me be honest here – there are times that we are transparent only within reason. For example, you may not get specific numbers from us, rather we’ll give you a range (and maybe one that you can drive a truck through). The reality is that sometimes it can be counterproductive to share too much detail. Our CFOs face this very same reality.  At our 11th annual CFO Roundtable earlier this month, transparency was a popular topic, which got me to thinking, How can CFOs promote transparency without compromising confidentiality?

Following are four common questions directed at CFOs with some considerations and recommendations:

As a growth-stage, investor-backed company, every employee should be granted options. When employees are owners, they are motivated to not only stay with the company, but also perform. But, as an owner, naturally, employees want to know what their options are worth. As such, CFOs are regularly faced with the challenge of communicating the value of stock options — and not only to existing employees, but to prospective employees, too.

In this case, transparency can create more questions than answers. There are too many variables at play over time between company performance and rounds of funding. As such, I like the approach one Edison CFO takes, using an analogy instead of specifics to frame potential outcomes for every level of the organization upon a successful sale of the company:

  • The founders/CEO could retire
  • The rest of executive team could pay off their mortgages
  • The VP/Director level could receive roughly their salary
  • The rest of the company could receive double their annual bonus

Speaking of a sale of the company..… Employees may want to know a general timeline for exit and

CFO Blog_pic.pngwhether the goal is to IPO or be bought. For executive hires, this is not an unreasonable ask, but anyone asking the question knows the answer will likely be vague and a moving target (unless an exit is imminent). For executives, it is not unreasonable to provide a rough range – whether a revenue range, or an expected timeline based on investor expectations. For the broader employee base otherwise, there is nothing to gain by setting any kind of exit timeline expectations with existing or prospective employees. That said, sharing the potential options is appropriate, i.e., IPO, strategic buyer (give examples), financial buyer.

And when an exit is imminent, mum’s the word. I worked alongside the Operative Finance department for two months in preparation for the company to be bought by SintecMedia in December.  For several weeks, I periodically asked the CFO “who can I talk to about this?” The answer was “no one.”  It is not uncommon for the buyer to want to control the message. As such, Operative’s internal communication was held until SintecMedia was ready to officially announce the pending transaction externally. On that day of the official announcement, the company held an all-employee meeting. While most employees were surprised, not surprising was the thunderous applause when the CEO reminded everyone that they’d be able to cash in their options!


In our world (growth equity), when a company is fundraising, they are doing so because they have proven product-market fit, have been growing at a rapid pace, and are looking to put more gas in the tank to fuel continued growth. This is an exciting time for the business, so don’t be shy about sharing with your team the fact that you are fundraising, and even any feedback received from prospective investors during the process.

Another reason for fundraising is when cash is low due to under-performance, over-spending or both. It’s stressful enough when sales isn’t hitting their numbers, or the product isn’t working, and/or budgets need to be cut, so this is a time when, as one Edison CEO puts it, “the CFO needs to be coolest cat in the company.” (I paraphrased; he definitely didn’t say “cat.”) If the CFO does not appear panicked about the state of the business, then employees will not panic. So, in situations like this, best to limit any talk of funding to the executive ranks. As a general rule, keep any cash balance discussion to Finance and the executive team. And, if your company is committed to full transparency up and down the organization, perhaps limit communication by simply providing a range (just make sure there’s room for that truck).

While cash balance is generally not one of a company’s key growth metrics, revenue and profitability are. And not only should these goals be shared with the entire organization, but each and every employee should know exactly how he/she will contribute to them (and their year-end bonus should depend on it).

In order to do this effectively, there needs to be shared vocabulary with crystal-clear metric definitions. Revenue can mean a lot of different things to anyone who isn’t a CPA: there’s GAAP, ARR, MRR, bookings – any of which may be how sales, marketing and operations are thinking about revenue. And don’t get me started on profitability! How many times have you witnessed a sales team celebrate a newly closed deal, only to find out the company is going to lose money fulfilling the customer requirements? Helping every department understand their impact on the P&L is essential to aligning the organization. Clear financial definitions that create a shared vocabulary across the organization is the first step and the basis for any regular cadence of employee communication about financial performance.

While these are just a handful of the difficult questions Edison CFOs are often asked, the list is endless. Be prepared to address just about any type of question, and more importantly, know the level of transparency to provide.

The post CFO Transparency: Should We Be Talking About That? first appeared on Edison Ventures.

There’s a Taskforce for That…


One thing successful companies figure out early is how to use multiple levers to accelerate growth. For growth-stage companies, mobilizing an organization across multiple, parallel initiatives is not easy when execution resources are limited, and when leadership over such initiatives tends to fall to the same one or two executives. But, whether your business is at $9M in revenue or $35M, there is one sure-fire method for successful cross-organizational alignment and execution: The Taskforce.


The notion of a taskforce is pretty self-explanatory and well understood by most, though we often associate taskforces with military, causes, law enforcement and/or government.  For purposes of this article, a taskforce is a cross-organizational team – a working group – focused on a specific growth initiative.  

In a growth company, the employee base expands quickly, demanding more/better collaboration across the company. The earliest of hires can grow accustomed to working with a small group of colleagues, or even on their own in a silo. New hires join, bringing different experiences and ways of working. It can take time for new and tenured employees to learn how to function together as a well oiled machine. Taskforces can accelerate the “norming” and “performing” of teams and do so in the context of a company’s top priorities.

The best use of taskforces is in alignment with the three to five strategic initiatives that support the annual plan. Common examples:

  • New market entry, such as a new vertical market or a move up market

  • Migration of customers from legacy or newly acquired product

  • Shifting to an account-based marketing and sales model for greater go-to-market alignment, higher quality demand generation and accelerated pipelines

  • Partner strategy and program development for improved gross margin and referral business

  • Building a self-service operation enabling purchase, training and support for small business segment

  • New pricing model development and rollout to all new and existing customers

Last year, Wyng (then Offerpop) assembled a taskforce focused on maximizing customer success and driving up retention. Likewise, Billtrust has a taskforce focused on driving and sustaining an innovation orientation through the company.

Taskforces are also useful in support of establishing and scaling operational disciplines, such as the rollout of new product releases. Recently, Terminus recognized the need for greater cross-organizational readiness as they looked to the release of new, major product enhancements this year. Minor product updates had not been a heavy lift for the company, but they knew major releases would touch virtually every department and, as such, required more advance planning and teaming.

As growth fuels inevitable product diversification, single-product companies that are great at readying the company and its customers for new releases will have an easy transition to becoming a multi-product business. What was once a taskforce simply becomes a matter of standard business operations.

  1. An appointed chairperson. If possible, resist the urge to put the most senior, relevant executive in charge. This is an opportunity to recognize and develop leaders at the next level down in the organization.

  2. Five to six members representing respective, relevant functions. Again, this is an opportunity to recognize top performers and build leadership at every level. Members are true stakeholders and must behave like owners with a willingness to take on tasks, serve as a conduit for both the taskforce and their functional teams, report status. and raise and address issues.

  3. Defined objectives with quantifiable goals, e.g., new bookings growth, gross margin improvement, sales cycle reduction, more revenue per customer, etc.

  4. Date and/or metric driven tripwires as leading indicators of success. Be agile. Run in sprints to put incremental points on the board. 

  5. A detailed project plan with clear deadlines and dependencies.

  6. Weekly meeting cadence (perhaps twice weekly at times) with pre-set agenda communicated in advance. Rotate scribe responsibilities. Publish notes to a shared workspace, e.g., Confluence, Trello, Sharepoint, Jive.

  7. Company-wide communication of progress, e.g., all-employee standups, townhall meetings.

All in all, as a growth-stage business, your team needs to build the muscle for effective execution of parallel growth initiatives. Embracing a taskforce approach emphasizes priorities, ensures cross-organizational alignment, limits execution risk, not to mention, helps to build your company’s next generation of leaders. 

Edison Partners Leads $10M Growth Equity Investment in Terminus


Princeton, NJ — May 15, 2017 — Edison Partners today announced leading a $10 million Series B growth investment in Atlanta-based account-based marketing platform company Terminus, alongside Atlanta Ventures, with participation from existing investors. Terminus will use the funds to further build out its account-based marketing (ABM) platform, its ABM Cloud partner program, and expand operations with a new West Coast office.

Since Edison’s Series A investment one year ago, Terminus has experienced more than 600 percent revenue growth, a 300 percent increase in its customer base, and has quadrupled its employee base. “Terminus sales and customer growth are both highly indicative of the broader trend; more marketing dollars are flowing into ABM strategies to create better alignment with sales,” said Ryan Ziegler, Edison General Partner and Terminus board member. “The company has created the category, is realizing the benefit of making ABM accessible and scalable for B2B marketers through its platform, and this investment will help them further accelerate growth through continued product innovation.”

Terminus’ software-as-a-service, account-based marketing platform enables B2B marketers to use data contained in (or even lacking from) customer relationship management systems, such as Salesforce, to proactively orchestrate marketing campaigns through buyer and customer journeys, creating demand, accelerating pipeline and driving up customer value. Since its 2014 founding, Terminus has been named the fastest-growing software company in Atlanta, and has won numerous workplace awards, including #1 Best Place to Work in Atlanta in 2016.

“Our rapid success is a derivative of having a partner like Edison giving us formative support and believing in our mission. Their team and network have proven invaluable, from helping us round out our team, to coaching our executives, and reinforcing our market opportunity,” said Eric Spett, CEO and Co-founder of Terminus. “It’s been an exciting journey so far, and we know that Terminus is on the right path to sustained growth and innovation.”

Edison Partners has financed and guided more than 200 private companies, including 31 Marketing Technology companies focused on solutions that sell into the CMO suite.  Noteworthy exits include ACT!, Cadient, Dendrite, Vocus, and NetProspex. Current investments include: Arkadium, iQ Media, ItemMaster, Jornaya, LookBookHQ, Magnetic, Pixability, RealMatch, Receptiv, Salsa Labs, Terminus, TripleLift, and Wyng. Over the last 18 months, Edison has invested in four Marketing Technology companies from its latest fund, Edison Partners VIII.

About Terminus

Terminus is the leading account-based marketing (ABM) platform that enables B2B marketers to target key accounts, engage decision-makers, and accelerate marketing and sales pipeline velocity at scale. Companies, such as Salesforce, Domo, Vidyard, and Rosetta Stone, use Terminus as a foundational platform for ABM. In 2017, Terminus was named the Fastest Growing Software Company by The Atlanta Business Chronicle and #1 in Employee Appreciation by The Atlanta Journal-Constitution. To learn more about the Terminus ABM platform, visit

About Edison Partners
For more than 30 years, Edison Partners has been helping CEOs and their executive teams navigate the entrepreneurial journey and build successful companies. Through the unique combination of growth capital and the Edison Edge platform, consisting of operating leverage, the Edison Director Network, and executive education, Edison employs a holistic approach to accelerating growth and creating value for businesses ($5 to $20 million in revenue) in financial, healthcare, enterprise and marketing technology sectors. Edison investment objectives also include: buyouts, recapitalizations, spinouts and secondary stock purchases.

Edison’s active portfolio has created aggregate market value exceeding $10 billion. Its long-tenured team based in Princeton, NJ manages more than $1 billion in assets throughout the eastern United States.

Edison Partners Leads $8M Series A Growth Investment in Solovis



Princeton, NJ — May 9, 2017 — Edison Partners today announced leading an $8 million Series A growth investment in Dallas-based Solovis, the leading provider of portfolio management and reporting software for foundations, endowments, pensions, and family offices. Prior investors also joined the round. Solovis will use proceeds to support continued company growth and drive product and services innovation.

Solovis has grown revenue 300 percent since Edison’s initial investment in 2016. The company has signed dozens of customers since it began selling its software just over two years ago and counts some of the industry’s largest investment managers as customers—including one of the top five college endowments in the U.S. and one of the top five foundations in the world. Solovis was also recently recognized as the industry’s top technology vendor by CIO Magazine.

“We are impressed by Solovis’ rapid growth, deep roster of marquee customers, and its market leadership position as the go-to provider of portfolio analytics and reporting solutions for institutional investors,” said Tom Vander Schaaff, General Partner, who led the investment for Edison. “The financing will allow the company to continue to expand its product portfolio and magnify its already significant impact on the industry.”

For the growing number of investment managers turning to sophisticated, diversified portfolios and global multi-asset strategies, Solovis has emerged as the industry standard. Its cloud-based software platform provides a holistic view of assets to analyze risk and performance, enabling greater transparency, rapid insight, and advanced reporting that allows investors to take quick actions and more closely manage risks.

“Edison has been a wonderful partner; their approach to founder-led organizations like Solovis has given us the confidence and powerful insight to execute on our vision,” said Josh Smith, founder and CEO of Solovis. “With a consistent willingness to assist in any way possible, including introductions to members of the Edison Director Network, who have played important roles in our growth, we are thrilled to have them alongside us as we become the industry standard for multi-asset class managers.”

The Edison Partners’ Financial Technology practice has completed 43 investments since the firm’s founding. Notable exits include Edgetrade, FolioDynamix, GAIN Capital, Liberty Tax and Princeton Financial. Current investments include: Axial, BFS Capital, Billtrust, Clearpool Group, Compliance Science, GAN Integrity, OptionsCity, Predata, Scivantage, and Trader Tools. The initial growth equity investment in Solovis marked the fourth Fintech investment from Edison Partners’ fund VIII (closed July 2016).


About Solovis

Solovis is a multi-asset class portfolio management and reporting solution for foundations, endowments, pensions, OCIOs and family offices. Specifically designed and built for the age of open architecture asset management, Solovis is a flexible, robust platform created to generate detailed analysis and dynamic data modeling across multiple portfolios and pools of capital for actionable, transparent reports that empower investors spanning the front to back office. Solovis has offices in Dallas and Charlottesville. Visit or send an email to info(at)solovis(dot)com to request a product demonstration.

About Edison Partners
For more than 30 years, Edison Partners has been helping CEOs and their executive teams navigate the entrepreneurial journey and build successful companies. Through the unique combination of growth capital and the Edison Edge platform, consisting of operating leverage, the Edison Director Network, and executive education, Edison employs a holistic approach to accelerating growth and creating value for businesses ($5 to $20 million in revenue) in financial, healthcare, enterprise and marketing technology sectors. Edison investment objectives also include: buyouts, recapitalizations, spinouts and secondary stock purchases.

Edison’s active portfolio has created aggregate market value exceeding $10 billion. Its long-tenured team based in Princeton, NJ manages more than $1 billion in assets throughout the eastern United States.

The CEO I Am Today Will Not Be Successful Tomorrow

At our 1st annual Strategic Growth Summit, we had the privilege of hearing from three CEOs (John Becker, Former CEO of Sourcefire; Flint Lane, CEO of Billtrust; Bill Wagner, President & CEO of LogMeIn) that have grown companies to break the revenue barrier of $50M. While their growth journeys were unique, there was consensus around a particular sentiment: “The CEO I am today will not be successful tomorrow.” They each used different analogies to arrive at the conclusion (e.g. kids growing up, chapters in a book), but the message was the same.

My favorite advice from the panel was:

1. Surround yourself with the right people. Entrepreneurs amaze me – they seem to never run out of motivation, energy, enthusiasm, ideas, stories, lessons learned, prospects, money (oh wait, they do run out of that). On day 1, they do just about everything themselves: they sell, they innovate, they solve problems. The issue with that model is it doesn’t scale; CEOs need help. And step one is admitting the problem.  They need help from their peers, from management and even from their boards. More often than not, they have significant influence over who is sitting around the table, and the key is to find people who have done it before. If you need an astronaut to lead a mission to the moon, are you going to call Buzz Aldrin or a sophomore Astrophysics major at Princeton? The same applies when filling out your board or management team. If you surround yourself with early-stage investors and first-time executives, you’re less likely to evolve into the company that fulfills your long-term vision.

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2. Know your role and let go of everything else. Once you’ve found the people that have done it before, let them do their thing! There are always going to be challenges, but if the CEO is the one addressing them daily, that’s probably all they are going to have time for. You brought in Buzz Aldrin and you still want to drive the spaceship? Let Buzz fly it! I’m sure you’ll have plenty of other things on your plate. Speaking of which…

3. When issues are identified, don’t dismiss them. The panel agreed that challenges are often seen well before they set you back. The only way challenges become opportunities is if they are addressed early and with the right amount of attention. When your sales reps come to you and say “we need another product,” then you might need another product. If your customers are coming to you and saying “you need another product,” then your customers are likely churning a little faster than you would prefer. The right time to address departmental issues are when they are first brought up, not when they turn into organizational problems.

So while your business may be crushing it today, look down the road to that ultimate target number (btw, $50M is a good goal post), and ask yourself “what changes are needed to get there?”