Finance Ops Systems / Overview

What systems do we use for Finance Ops, how we manage finance and accounting for portfolio companies, and key financial metrics to keep track of.

Finance Ops Systems

1. SVB: Main Checking Account and Cash Sweep Account

   1. Founders can view balances and approve wires for payments here. OCV funding will be deposited into the bank accounts after common stock purchase is complete.

   2. OCV will set up accounts with SVB for portfolio companies. The company executive team will also have access to SVB.

2. Brex: Corporate Credit Card and Bank Account

   1. All employee cards as well as the company's main accounting credit card are issued through Brex.

   2. Founders can view the card details and approve transactions here.

   3. Brex will also house the secondary checking account for systemic risk mitigation.

   4. OCV will set up accounts with Brex for portfolio companies. The company executive team will also have administrative access, while other employees may have access to employee Brex cards.

3. Carta: Finance and Equity Administrator

   1. Company financial data including the capitalization table are available in Carta.

   2. The legal team will initiate setup for Carta for portfolio companies using their partnership deal. The company executive team will also have access to Carta.

4. Stripe: Payment Processor

   1. Stripe is a payment processor.

   2. Founders will set up Stripe on their own for their prospective companies. OCV has partnered with Stripe to provide credits for portfolio companies (see Vendor Deals).

Your Company Finance Team

Each OCV company will engage directly with a dedicated external Accounting & Finance team. The Accounting and Finance team invoices each company directly at pre-negotiated billing rates.The Accounting & Finance team is responsible for the following:

• ​Bank account management​

• ​Corporate credit card expense reconciliations​

• Invoice processing and payments (both customers and vendors)

• ​Payroll administration​

• Monthly financial statements

• Compliance activities (i.e. filing company’s annual reports)

• ​Tax return review (work with tax firm on annual tax returns)

• ​Runway modeling (generally for post-Seed companies)

CTOs and CEOs will be introduced to their Accounting & Finance team at onboarding and will have a dedicated messaging channel to communicate with this team as needs and questions arise.

Monthly Finance Review Call

Before CEO onboarding, OCV meets with the Accounting & Finance Team to review runway, key changes in company financials, and company updates, etc. Once a CEO is onboarded, the Accounting & Finance Team will schedule a dedicated monthly finance review call for the company. OCV will support transition and join as optional until Seed round closes.

Budget for 18 months of runway

In general, we recommend creating a rough operating budget for ~18 months of runway at the start. This is a reasonable time estimate to meet key milestones that Seed round investors would be looking for in their investment evaluation. Market conditions and company-specific needs may increase or decrease this estimate. The key is to plan for and allocate resources ($) to meet milestones that will (1) demonstrate sufficient traction to secure new funding from investors and (2) increase the valuation of the business.Runway Considerations

1. Milestones to be reached before the next round of financing

2. What resources/teams are required to reach these milestones?

3. Aim to grow the company 20% every two weeks.🎯Goal Setting

4. Burn rate

5. At your current operating level

6. How much faster would you be able to grow if you increase the burn rate?

7. A long runway doesn’t make a company sustainable - startups need to focus on growing fast

8. After a fundraising round, aim for 18-24 months of runway. Fundraising should take place with 6 months of runway remaining (with less than this investors will view unfavorably)

9. Macro environments

10. Funding availability

11. Talent pool availability

12. Global economic outlook (impacts customer purchase decisions/contract size and terms/sales cycle)

Rule of 40

The Rule of 40 is a popular metric used in the SaaS industry to evaluate the overall health and growth potential of a company. It helps assess the balance between revenue growth and profitability.The Rule of 40 states that the sum of a company's revenue growth rate and profit margin should be equal to or greater than 40%. In other words:Revenue Growth Rate + Profit Margin ≥ 40%A company with a high growth rate but negative or low profit margin may struggle to sustain its operations in the long run and should account for this in balancing rapid growth with healthy profit margins.By focusing on both revenue growth and profitability, the Rule of 40 encourages companies to find a balance between investing in growth and achieving profitability. It serves as a guideline for evaluating the overall financial performance and sustainability of a SaaS company.