In an era where capital is cautious and governance has become central to valuation, finance leadership is undergoing a fundamental transformation. No longer limited to accounting and compliance, today’s finance leaders are expected to be strategic partners, custodians of capital, and enablers of long-term trust.
In this insightful conversation, PK Sambamoorthy—Startup Advisor and Mentor, Angel Investor with the Indian Angel Network and IP Ventures, and a seasoned finance leader with nearly three decades of experience across finance, legal, accounts, and secretarial leadership—shares his perspective on how effective finance leadership has evolved, what investors look for in early-stage startups, and why governance must be embedded from day one. Drawing from his experience advising startups, SMEs, and mid-sized corporates, he offers practical, no-nonsense guidance for founders and finance leaders navigating today’s challenging funding environment.
The Evolution of Effective Finance Leadership
According to PK Sambamoorthy, finance leadership has evolved from being a mere controller of numbers to becoming a strategic partner to the Board and the CEO. While statutory compliance and strong internal controls remain foundational, modern finance leadership demands forward-looking analytics, robust forecasting, and active involvement in capital structuring and external equity or debt fundraising.
In recent years, the role has further expanded to include driving digital transformation within finance functions, improving data quality, and enabling enterprise-wide performance management.
In startups, the expectations are even more demanding. Finance leaders must operate with lean yet resilient teams, conserve cash, ensure runway visibility, prepare companies for fundraising, create compelling pitch decks, negotiate term sheets and shareholder agreements, and manage post-funding investor relations through high-quality reporting and strong corporate governance.
What Makes a Startup Truly Investor-Ready
From an angel investor’s perspective, PK Sambamoorthy emphasizes that investor readiness goes well beyond a strong idea. He looks for professionally qualified founders with complementary skill sets, clearly defined roles backed by founders’ agreements, and a clean, well-structured cap table.
Equally important are a solid management team with operational experience, a well-thought-out business model, clarity on unit economics, and a realistic strategy to reduce cash burn. A robust but moderate financial plan, a clear path to profitability, sound competitor analysis, and effective risk management practices are critical signals.
Founders must demonstrate a deep understanding of their numbers, show visible business traction, track repeat customers and churn, and present a well-structured, credible pitch deck. Together, these elements reflect discipline, preparedness, and respect for investor capital.
Early Governance Red Flags During Due Diligence
Governance-related red flags often emerge early in the due diligence process. PK Sambamoorthy points to ambiguity in promoter roles, frequent disagreements in decision-making, and the absence of regular board meetings as some of the earliest warning signs.
From a financial standpoint, lack of discipline in fund management, absence of a Management Information System (MIS), poor understanding of burn rate and cash runway, and no visibility on unit economics or path to profitability are serious concerns. Delays in statutory payments, weak controls over related-party transactions, and irregular financial reporting further compound risk.
Inadequate information flow during due diligence, delays in sharing documents, frequent changes in responses, or a defensive attitude from promoters or board members—even on basic queries—are clear indicators of deeper governance issues.
Why Governance Must Begin on Day One
PK Sambamoorthy strongly believes that governance cannot be treated as a later-stage concern. From inception, startups must establish a functioning Board of Directors, supported by advisors or mentors, and conduct regular board meetings.
Foundational governance includes a robust co-founders’ agreement covering share vesting, exit scenarios, ESOPs or sweat equity, and maintaining a clean cap table. On the operational side, maintaining proper books of accounts, implementing audits, MIS, regulatory compliance, and ensuring timely statutory payments are non-negotiable.
As the organization matures, forming board subcommittees for audit, compensation, and compliance signals seriousness in building a professionally managed, ethical, and compliant business.
Balancing Growth with Capital Efficiency in Today’s Funding Climate
In the current funding environment, PK Sambamoorthy stresses that growth must be purposeful and capital-efficient. Founders should pursue growth that improves unit economics, extends runway, and accelerates the journey to profitability.
Investors today prioritize sustainable business models with financial discipline over aggressive top-line expansion. Valuation discussions increasingly focus on revenue quality, gross margins, repeat customers, net revenue retention, and burn multiples—rather than just GMV or topline growth.
While scalability remains important, burning cash purely for growth is no longer acceptable. Consistent month-on-month or quarter-on-quarter progress, backed by efficient execution, is what builds investor confidence.
How the CFO’s Role Evolves as Companies Scale
At the startup stage, the finance leader’s role is largely hands-on—focused on cash conservation, fund flow management, fundraising support, compliance basics, MIS, and creating investor-ready financial narratives. Negotiating valuation and investment terms is a critical skill at this stage.
As companies grow into SMEs, the CFO must broaden their focus to optimizing operations, driving efficiency, implementing SOPs, managing risks, building teams, and providing data-driven insights for decision-making. Strategic planning and cross-functional collaboration become essential.
In mid-sized corporates, the CFO acts as a growth catalyst—overseeing capital raises, mergers and acquisitions, corporate governance, digital transformation, ESG alignment, and investor relations. Preparing the company for an acquisition or IPO and enabling investor exits become key responsibilities.
Transparency and Financial Reporting as Trust Builders
Transparency and financial reporting play a pivotal role in building and sustaining long-term trust between founders, boards, and investors. With rising regulatory scrutiny, credible and timely financial disclosure is no longer optional.
PK Sambamoorthy highlights the importance of a strong financial reporting framework with clear formats, regular updates on statutory compliance, and transparent sharing of performance metrics. Such practices reduce risk, enable better decision-making, and strengthen stakeholder confidence.
How Angel Investing in India Has Evolved
Angel investing in India has become significantly more disciplined over the last decade. Investors now place greater emphasis on governance, founder accountability, and financial rigor.
Today’s angels look closely at founders’ agreements, vesting structures, ethical financial reporting, cap table clarity, and founder integrity. Unrealistic valuations and overly optimistic projections are actively challenged.
Seed-stage funding has slowed, cheque sizes are more measured, and experienced founders are preferred over momentum-driven narratives. Many angels now seek board or advisory roles, actively mentoring founders and enforcing accountability.
Corporate Finance Lessons That Matter Most for Startup CFOs
Several principles from corporate finance leadership are particularly relevant for today’s startup finance heads. These include strong corporate governance, high-quality forecasting, disciplined burn management, focus on unit economics, investor access, due diligence readiness, negotiation capability, cap table structuring, valuation discipline, and post-funding investor relationship management.
Adopting these practices early enables startups to scale responsibly and attract long-term capital.
The One Principle Founders and Finance Leaders Must Never Compromise On
For PK Sambamoorthy, the single most important principle is ethical, transparent, and professional financial reporting.
This includes accurate disclosure of unit economics, growth and traction metrics, cash burn and runway, business setbacks, related-party transactions, and regulatory compliance status. Transparency is not just a governance requirement—it is the foundation of credibility, trust, and sustainable success.
Conclusion
As PK Sambamoorthy’s insights make clear, finance leadership today is about far more than managing numbers—it is about stewardship, strategy, and trust. In a capital-constrained and governance-conscious ecosystem, startups that embed financial discipline and transparency early are far better positioned to survive, scale, and succeed.
For founders and finance leaders alike, the message is unequivocal: treat governance as a growth enabler, respect investor capital, and build credibility from day one. These principles, consistently applied, are what ultimately transform promising startups into enduring enterprises.
-Interview conducted by Sandhya Bharti