HALIFAX — For the last couple of years, Cole Kroach, Snapcommerce’s director of finance and strategy, was in charge of managing the Toronto-based e-commerce promotions startup’s books. The arrangement worked for a time, getting the firm—backed by Quebec-based Inovia Capital and Golden State Warriors superstar Stephen Curry—through its first few funding rounds. 

But as its business took off during the COVID-19 pandemic, more investors came knocking. After closing a $107-million venture capital round in March, nearly four times what it had raised at that point, according to PitchBook, the firm’s leadership realized they needed to beef up its slender finance team. 

Last week, Snapcommerce announced it had recruited two finance veterans—one, Daniel Weisenfeld, for its executive team as chief financial officer, and another, Anan Kashyap, to sit on its board. They add to a spate of CFO appointments across Canadian startups, many of which find themselves making the moves sooner than they expected, to help manage investment windfalls amid record-high venture capital activity.  

“Hiring a CFO is something we thought about before this last round, but that round accelerated the decision,” said Hussein Fazal, Snapcommerce’s co-founder and CEO. “We have a lot more money in the bank to manage.”

Snapcommerce, formerly Snaptravel, launched in 2016 as an AI-enabled mobile tool connecting users with travel promotions. It’s since expanded beyond travel, growing rapidly in other e-retail verticals since the start of the pandemic. The company says it’s on track to increase mobile sales by over 100 per cent for 2021. The growth has accelerated its plans to go public, said Fazal—and its need to hire dedicated financial experts. 

Weisenfeld is a former director of retail-investment banking at Bank of America, and has led over half a dozen IPOs. Kashyap, CFO of Poshmark, recently helped take that online shopping platform public, and was vice-president of finance at Grubhub and Kayak when they went public, as well. Fazal said that experience will help get the firm “IPO-ready.” 

“It’s very much good business practice,” he said. “Having audited statements, having independent board members,having discipline around closing your books, discipline around financial projections. Whether we go public through a traditional IPO, or a SPAC or want to raise more money, these are all good things for the maturity of the business.”

The number of CFO appointments at Canadian private companies that have raised between US$10 million and US$100 million total in venture capital increased 75 per cent for the 12 months ended May 31, compared to the same period the year before, according to data that analytics firm S&P Global Market Intelligence provided to The Logic.

Thentia, a Toronto-based government-licensing legaltech firm, is another company that hired its first full-time CFO this year. The startup appointed James Kurz to the position in May (he will also act as chief operating officer), a week after announcing it had closed a US$10-million Series B. (The firm briefly had a CFO in its early days, before outsourcing the tasks). Julian Cardarelli, Thentia’s founder and CEO, said the company needed a CFO to help deal with the financial and regulatory complexity of working in multiple jurisdictions as it expands its U.S. business and looks to launch in Europe. 

Like Snapcommerce, Cardarelli said Thentia grew faster than expected over the past year. “The pandemic has hastened the move toward digital transformation,” he said. “We had goals for when we would want to get to our Series B and we ended up meeting those goals around annual recurring revenue and valuation significantly faster than we had anticipated.”

Thentia and Snapcommerce are in a cohort of startups attracting record amounts of funding in Canada. Companies saw $2.7 billion in venture capital invested last quarter—typically the industry’s slowest period—more than any other quarter on record, according to the Canadian Venture Capital & Private Equity Association (CVCA). Average deal sizes also ticked up, as did the number of “megadeals” worth at least $50 million. Kim Furlong, CEO of the CVCA, told The Logic in May that the activity was driving more companies to the public markets sooner. “I think we’re going to continue seeing exits,” she said. “Based on my conversations with investors … a lot of people are preparing for that.” 

“There’s a lot of capital out there and companies are coming up to these financing decisions sooner,” said Fazal. “The sooner you can bring on a CFO, the more they can help with making some of these big decisions that ultimately have a very big impact on the life of the company.” 

Both Fazal and Cardarelli said having CFOs in place will help them prepare for eventual IPOs, though Cardarelli said going public is at least three years out for Thentia. 

Certainly, not all companies hiring their first CFOs are preparing for a public debut. Vancouver-based Boast.ai, which helps firms apply for government grants and tax benefits like the scientific research and experimental development credit, recruited its inaugural CFO in May. The hire followed a $30-million raise for the company, its first institutional funding round after bootstrapping for nearly 10 years. “Going through that [fundraising] process made me realize we had some gaps in the finance function, and somebody with experience really needed to own that,” said co-founder and CEO Alex Popa. The company is profitable, said Popa—a reason the CEO said he’s not in a rush to go public—but the budget was tight before the raise. “We started asking: what is the greenfield plan if you don’t have cash constraints? How fast can you grow in the next 18 months to 24 months? That’s something we never really looked at because we always had cash constraints.”

Along with the venture capital lift propelling startups to build up their finance departments, the pandemic has helped dissolve borders that can make it harder to recruit executive talent from abroad. The new CFOs at Boast.ai, Thentia and Snapcommerce are all based in the U.S. “It’s nice to hire executives, or any talent, from anywhere around the world,” said Popa, adding that while Boast.ai has never had an office-centric culture, about 90 per cent of its employees are based in Canada. 

At Snapcommerce, Fazal said the firm plans to keep growing its finance team, but also its engineering and product divisions. “We’re at a point where there are a lot of funding opportunities available to us—whether that be another private fundraising round, a SPAC or a traditional IPO,” he said. “We just want to make sure that we have the right team in place to assess these opportunities and take advantage of them.”