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04 Dawn Capital | With Raxita Kapashi, CFO

Raxita Kapashi oversees a $1 billion investment portfolio as CFO of Europe’s largest venture capital firm for B2B software, Dawn Capital. She shares the process of working on an IPO, her daily leadership framework, the challenges faced by portfolio companies and the metrics and KPIs she tracks.

Notes

Episode Summary

Raxita Kapashi has worked in private equity for more than 15 years. Along the way, she did a stint at fintech consolidator TruFin, where she served as the group’s CFO. While at TruFin, she brought through an IPO and raised 70 million GBP ($96 million USD) in 2018. 

With this accomplishment under her belt, it’s no surprise numerous venture capital firms sought to bring her onto their team. However, it was the inclusive company culture of Dawn Capital that dazzled and ultimately won Raxita over.

An early-stage venture fund, Dawn is Europe’s largest specialist B2B software investor. As the company’s first official CFO, Raxita oversees its $1 billion in assets and 50 investments. That means her day-to-day is filled with financial planning, budgeting and forecasting, cash flow management and performing valuations — plus, tons of meetings. She also monitors Dawn’s portfolio investments to help them get acquired. 

In this episode of The CFO Playbook, tune in to hear Raxita discuss the process of working on an IPO, her daily leadership framework, the challenges faced by portfolio companies and the metrics and KPIs she tracks. 

Raxita also breaks down possibilities for the CFO career path and shares tips for working your way to the top.

Connect with Raxita on LinkedIn.

Connect with our host Rob on LinkedIn.

Full show notes and resources from this episode can be found here.

If you want a better way to track and control your team’s spend, checkout Soldo.com.

Guest Analysis

Name: Raxita Kapashi

What she does: Raxita is the CFO of Dawn Capital, a venture capital firm and Europe’s largest specialist B2B software investor. She’s responsible for all areas of finance, strategy, governance and compliance, operations and more. 

Key Quote: “We have a diversity inclusive culture, and that's really important to Dawn. We have a gender-balanced workforce and people from lots of different backgrounds, which makes for a better working environment — it also represents the diverse range of our founders and our investors as well.”

Where to find Raxita: LinkedIn

From Raxita’s Playbook

Show your work — track the right metrics to justify your decision making. 

With capital from its limited partners, Dawn Capital buys and grows businesses, and then sells them within three to five years. This involves closely monitoring the businesses’ performance using KPIs specific to the venture capital and private equity industry, like money multiples and internal rate of return. 

There’s no rushing the IPO process (so don’t try).

Prior to Dawn Capital, Raxita was the CFO of TruFin, which she successfully took to IPO after raising 70 million GBP — a milestone she reached in six months. However, IPOs don’t come along easily. Raxita advises CFOs to begin to prepare one year to 18 months in advance. Among audits and the green light from legal, you’ll need financial documents (think: working capital reports and three years of financial estimates), marketing strategies, risk assessments — you name it. It's critical you have a system in place to verify accuracy. 

For CFOs in the VC and private equity realm, ongoing education is critical because of the role of regulation.

Compared to their industry counterparts, CFOs in the VC and private equity space face more regulatory compliance — for starters, from the UK’s Financial Conduct Authority (FCA) and other European regulatory bodies. These regulations necessitate continuous education to stay up-to-date. Raxita shares that because Dawn is FCA-regulated, it logs employee trainings and hosts monthly “lunch and learn” sessions to hone both the finance team and wider company’s knowledge.

Episode Highlights

The varied schedule you can expect as the CFO of a VC

“Aside from the monthly and quarterly reporting aspect, there's no typical week or month. The finance team could be busy on a number of things, ranging from supporting deals, supporting the investment team on investments and exits. We get involved with regulatory compliance, tax and [value-added tax] issues [and] there are quite a lot of investor queries we have. Obviously, being a CFO, you have to keep on top of cash flow management, budgeting and forecasting — and then there are various other operational matters to deal with. … There’s no real typical week or month, I can say.”

The roadmap for a successful IPO 

“You have to look at risk and produce a whole document on risk. You have to produce a working capital report as well, and then you have to stress test your working capital assumptions, so that was a large part. You have to produce three years of financials, which obviously have to be audited. Then you get involved with the [private placement memorandum]. It's absolutely important that everything is verified and checked and accurate. Then there's a legal aspect of doing the IPO, where you're working with lawyers on the PPM. So it's an all-parties, quite heavily intensive period before the IPO.”

Diversity as a framework for management 

“I think the company culture is very important, and I think everyone at Dawn embraces integrity, and integrity fosters a good company culture. It's important for all team members to have a voice and to voice our opinions — and they are listened to, so that's also very important. As I mentioned previously, we have a diversity inclusive culture, and that's really important to Dawn. We have a gender-balanced workforce and people from lots of different backgrounds, which makes for a better working environment and also represents the diverse range of our founders and our investors as well.”

Finance recruitment: Tighten the hiring process  

“Managing a team can take up most of a CFO's time. But the first step has got to be recruiting the right person for the job. I've recruited several people over my career, and I readily admit that I have made some mistakes and that's because in the past, I recruited based on just looking at their CV and how a person came across an interview. But now, what I do is actually, I've devised a test. So, I actually test the candidates before I even interview them, and this has been a critical first step to know whether the candidate has the ability to do the task at hand.”

Post-COVID challenges of portfolio companies 

“It really depends on the jurisdiction, but obviously, [portfolio companies] are looking at various types of funding. They'll get funding from the VC, but would it help to get some venture debt or are there any government funding loans out there? ... Then what we're also seeing is the grab for talent and acquisition, so that's really important. Typically all our portfolio companies will be looking to upscale their marketing and sales effort, so it’s important for them to find the best people.”

Take full responsibility for your team as CFO

“Delegate effectively, but that does not mean discharging your responsibility. As a CFO, you're responsible for your team and it's really important they see you're supporting them. But ultimately, you're taking the responsibility for the output. It's really important for a CFO to know what's going on. I think a good financial leader should be able to see the bigger picture as well as be in the details.”

2021 priorities in venture capital

“We are launching our Dawn opportunities, too, so that's one of our priorities. … The other priorities are really ensuring for Dawn and for the portfolio companies — there's still some uncertainty with COVID and with the general economy — that our portfolio companies are managing their cash burn; that we're still having creative ways to look at our revenue streams, given the current environment, and really being on top of what our portfolio companies are doing. [Then] helping them manage any way we can, whether it's through advisors or through our network.”

Leverage technology to improve your finance processes

“Can you move with the times and use technology to grow your finance department? That's really important. Everything is about data — and that doesn't have to necessarily be in real-time data — but how are you using technology to extrapolate that data, to analyze the data, in such a way that you're helping the company commercially or from a statutory and regulatory point of view?” 

Top quotes:

“We won’t go out and say, ‘Hey, we've got a truly diverse culture; we have a gender-balanced workforce,’ because why say it when you can do it?”

“As a CFO, you're responsible for your team and it's really important they see you're supporting them. But ultimately, you're taking the responsibility for the output. It's really important for a CFO to know what's going on. I think a good financial leader should be able to see the bigger picture as well as be in the details.”

“We have this thing in the finance department that we can always improve, we can always make things better, we can make things more efficient. When you put that in place, it's like a collective responsibility to improve what we do and how we do things.”

“Don't just take what you did last year and say, ‘OK, we'll do the same again this year.’ Think outside the box — think about how is the company going to grow and how are you going to scale the finance team to grow with it? How are you going to adapt to various changes that inevitably come our way, whether it's COVID last year — but, in five years’ time, it might be something else. How are you going to adapt to that?”

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