Mihai Faur, CIO of UiPath, on Building Strategic Finance Teams
Share
Mihai Faur is the Chief Information Officer (CIO) of UiPath, a $10B publicly-traded business automation software company. After joining UiPath in 2016 as the 20th employee, Mihai went on to serve as a leader of multiple departments, assuming roles including Chief Financial Officer, Chief Accounting Officer, and Global Controller. Over his 7-year tenure at the company, UiPath grew ARR from $200k to over $1B and went public on the New York Stock Exchange in 2021, under Mihai’s guidance. With prior experience at various European startups and global accounting firms like Arthur Andersen and E&Y, Mihai serves as a seasoned advisor to early-stage teams.
Crew Capital recently hosted Mihai for a roundtable discussion with our portfolio companies. He shared insights on scaling finance teams, effective investor communication, the role of IT in digital transformation, and identifying the SaaS metrics that matter.
Nurturing a common vision for sustainable growth
To ensure a company’s successful growth, a shared vision between the CEO and CFO is crucial. This vision should revolve around building a finance department that embodies scalability, durability, and innovation. The key lies in simplifying and streamlining operations, particularly those impacting financial aspects like treasury, banking, and data consolidation. If a company goes out to the capital markets to raise financing, finance teams will also be responsible for compiling metrics that can be shared with investors.
Strategic hiring for business growth
Mihai underscores the need for hands-on involvement from finance leaders in the hiring process, spanning from entry-level positions to leadership roles. He emphasizes the importance of four key roles that are typically crucial as a company scales its finance team.
- An operations professional with expertise in managing heavy operational processes like invoicing and collections
- An accounting specialist skilled in ensuring proper accounting treatment for transactions
- A tax professional to assist in crafting tailored tax strategies and optimizing the company’s tax position while minimizing liabilities
- A financial planner & analyst (FP&A) who focuses on forecasting, budgeting, and financial analysis
In-house vs. outsourcing financial functions
Outsourcing financial functions offers several advantages for startups, including cost savings, access to specialized expertise, scalability, and enhanced focus on core activities. However, Mihai states there are drawbacks to this approach, including loss of control, limited customization, potential communication challenges, and data security risks.
When deciding which finance functions to outsource, Mihai advises considering specialized tasks like tax management, as they can benefit from external expertise while keeping critical processes in-house. The key goal is to make the finance function less dependent on individuals, and more reliant on systems and automation.
The influence of AI on modern strategic planning
Mihai discusses the profound impact that AI stands to have on strategic planning, particularly in the realm of automation and business transformation. Traditional robotic process automation is being disrupted as large language models can make sense of unstructured data. The conversion of unstructured data into structured formats will enable faster decision-making and process optimization. Mihai strongly believes that CIOs everywhere will increasingly be dealt opportunities to drive automation on previously unstructured data and processes, using AI.
The impact of Large Language Models (LLMs)
Large Language Models (LLMs) have the potential to significantly impact various business processes. For finance teams, automation capabilities can lead to cost savings and improved efficiency, while contributing to higher profit margins. In customer support, LLMs will enhance engagement & satisfaction, aiding in customer retention and revenue growth. In data analysis, LLMs will provide valuable insights for informed decision-making across functions and departments.
Key Metrics to Monitor
Mihai underscores the importance of tracking key financial metrics, from common ones including recurring revenue and dollar-based net retention (aka net retention rate), as well as metrics that founders may be less familiar with such as cohort-based metrics analysis. At the early stages, Mihai highlights the importance of monitoring the cash burn. For later stage companies, Mihai cites gross margins, operating margins, and free cash flow margins as being critical.
Proactive technology planning
Mihai emphasizes the significance of proactive technology planning from the outset, rather than treating it as an afterthought. Planning the finance stack during the earliest phases of company building will lead to less manual work in the future. When choosing software tools like CRMs, ERPs, procure-to-pay, or treasury systems, prioritize options that offer easy integration to existing software systems.
Data integrity for streamlined reporting
As the startup continues to grow, processes may evolve, but the ultimate goal remains stability and easy access to consolidated data. To achieve this, companies should assess their most burdensome operational processes and concentrate on optimizing them. When data is well-maintained and systems seamlessly integrate, external reporting becomes straightforward, especially for privately-held companies that do not have to do public reporting with the SEC. At this stage, the focus should be on achieving consistency and simplicity in reporting. Ideally, the financial model should align with how data is organized within the actual business.
Potential setbacks to be aware of during growth
Adapting to different company sizes. One of the challenges often encountered while a company scales is adapting employees’ mindset to match the company’s size and growth stage. In the early stages, the emphasis is on building, innovating, and rapid expansion, with “builders” forming the backbone of the organization who push boundaries and translate the vision into reality. As the company matures, “scalers” ensure stability, efficiency, and seamless operations.
Forecasting. All startups face a variety of forces pushing towards and pulling against their growth – from technological advancements and competition, to regulation and changing customer sentiment. To mitigate the inherent challenges associated with making forward-looking estimates, Mihai suggests that maintaining a flexible approach is essential. This involves ongoing trend monitoring, strategy reassessment, and readiness to adapt to evolving circumstances.
Tax and Legal Aspects. Neglecting tax and legal aspects, from intellectual property rights to compliance with local and international laws, can lead to legal disputes, damage the company’s reputation, and financial setbacks. Mihai highlights the importance of being aware of tax and legal considerations from the beginning of a company’s lifecycle.
Mihai Faur is the Chief Information Officer (CIO) of UiPath, a $10B publicly-traded business automation software company. After joining UiPath in 2016 as the 20th employee, Mihai went on to serve as a leader of multiple departments, assuming roles including Chief Financial Officer, Chief Accounting Officer, and Global Controller. Over his 7-year tenure at the company, UiPath grew ARR from $200k to over $1B and went public on the New York Stock Exchange in 2021, under Mihai’s guidance. With prior experience at various European startups and global accounting firms like Arthur Andersen and E&Y, Mihai serves as a seasoned advisor to early-stage teams.
Crew Capital recently hosted Mihai for a roundtable discussion with our portfolio companies. He shared insights on scaling finance teams, effective investor communication, the role of IT in digital transformation, and identifying the SaaS metrics that matter.
Nurturing a common vision for sustainable growth
To ensure a company’s successful growth, a shared vision between the CEO and CFO is crucial. This vision should revolve around building a finance department that embodies scalability, durability, and innovation. The key lies in simplifying and streamlining operations, particularly those impacting financial aspects like treasury, banking, and data consolidation. If a company goes out to the capital markets to raise financing, finance teams will also be responsible for compiling metrics that can be shared with investors.
Strategic hiring for business growth
Mihai underscores the need for hands-on involvement from finance leaders in the hiring process, spanning from entry-level positions to leadership roles. He emphasizes the importance of four key roles that are typically crucial as a company scales its finance team.
- An operations professional with expertise in managing heavy operational processes like invoicing and collections
- An accounting specialist skilled in ensuring proper accounting treatment for transactions
- A tax professional to assist in crafting tailored tax strategies and optimizing the company’s tax position while minimizing liabilities
- A financial planner & analyst (FP&A) who focuses on forecasting, budgeting, and financial analysis
In-house vs. outsourcing financial functions
Outsourcing financial functions offers several advantages for startups, including cost savings, access to specialized expertise, scalability, and enhanced focus on core activities. However, Mihai states there are drawbacks to this approach, including loss of control, limited customization, potential communication challenges, and data security risks.
When deciding which finance functions to outsource, Mihai advises considering specialized tasks like tax management, as they can benefit from external expertise while keeping critical processes in-house. The key goal is to make the finance function less dependent on individuals, and more reliant on systems and automation.
The influence of AI on modern strategic planning
Mihai discusses the profound impact that AI stands to have on strategic planning, particularly in the realm of automation and business transformation. Traditional robotic process automation is being disrupted as large language models can make sense of unstructured data. The conversion of unstructured data into structured formats will enable faster decision-making and process optimization. Mihai strongly believes that CIOs everywhere will increasingly be dealt opportunities to drive automation on previously unstructured data and processes, using AI.
The impact of Large Language Models (LLMs)
Large Language Models (LLMs) have the potential to significantly impact various business processes. For finance teams, automation capabilities can lead to cost savings and improved efficiency, while contributing to higher profit margins. In customer support, LLMs will enhance engagement & satisfaction, aiding in customer retention and revenue growth. In data analysis, LLMs will provide valuable insights for informed decision-making across functions and departments.
Key Metrics to Monitor
Mihai underscores the importance of tracking key financial metrics, from common ones including recurring revenue and dollar-based net retention (aka net retention rate), as well as metrics that founders may be less familiar with such as cohort-based metrics analysis. At the early stages, Mihai highlights the importance of monitoring the cash burn. For later stage companies, Mihai cites gross margins, operating margins, and free cash flow margins as being critical.
Proactive technology planning
Mihai emphasizes the significance of proactive technology planning from the outset, rather than treating it as an afterthought. Planning the finance stack during the earliest phases of company building will lead to less manual work in the future. When choosing software tools like CRMs, ERPs, procure-to-pay, or treasury systems, prioritize options that offer easy integration to existing software systems.
Data integrity for streamlined reporting
As the startup continues to grow, processes may evolve, but the ultimate goal remains stability and easy access to consolidated data. To achieve this, companies should assess their most burdensome operational processes and concentrate on optimizing them. When data is well-maintained and systems seamlessly integrate, external reporting becomes straightforward, especially for privately-held companies that do not have to do public reporting with the SEC. At this stage, the focus should be on achieving consistency and simplicity in reporting. Ideally, the financial model should align with how data is organized within the actual business.
Potential setbacks to be aware of during growth
Adapting to different company sizes. One of the challenges often encountered while a company scales is adapting employees’ mindset to match the company’s size and growth stage. In the early stages, the emphasis is on building, innovating, and rapid expansion, with “builders” forming the backbone of the organization who push boundaries and translate the vision into reality. As the company matures, “scalers” ensure stability, efficiency, and seamless operations.
Forecasting. All startups face a variety of forces pushing towards and pulling against their growth – from technological advancements and competition, to regulation and changing customer sentiment. To mitigate the inherent challenges associated with making forward-looking estimates, Mihai suggests that maintaining a flexible approach is essential. This involves ongoing trend monitoring, strategy reassessment, and readiness to adapt to evolving circumstances.
Tax and Legal Aspects. Neglecting tax and legal aspects, from intellectual property rights to compliance with local and international laws, can lead to legal disputes, damage the company’s reputation, and financial setbacks. Mihai highlights the importance of being aware of tax and legal considerations from the beginning of a company’s lifecycle.