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CVCA Member Profiles

CVCA New Member Profile: Aquifer Venture Builder CFO Services

This week we’re welcoming Aquifer Venture Builder CFO Services to the CVCA membership!

The CVCA caught up with Rich Zhou, Aquifer’s Founder and CEO to find out more about their operations, team, and what they’re excited about.

Tell us more about Aquifer.

Founded in March 2020, COVID month, Aquifer Venture Builder CFO Services is a finance-as-a-service firm that provides the Plug-in Finance Department” for startups so they don’t have to hire one themselves. Our team of 10 employees operates out of Toronto and the Philippines. We cater to startups in North America, preferably those that have annual revenue north of $1M and are in the Late Seed and Pre‑A stages. Unlike many alternatives such as online bookkeepers, online CPAs, Fractional CFOs, in-house finance managers, and even large accounting firms, all of which provide a singular segment of the accounting process, we provide the entire top-down list of services. We handle everything from bookkeeping, corporate accounting, tax, financial planning & analysis, modeling and valuation, capital raise, and so forth. You can say that we are a one-stop shop.” We are also 70% cheaper than hiring and training an in-house department. It’s a cost-effective alternative that will allow founders to spend more capital and time on building technology and sales which are departments that drive the top line of the business. 

What is Aquifer’s focus?

When people think of startups these days, they tend to think about the high risk of operating one. I read somewhere that over 95% of startups fail. We just never hear about them. Startups can also fail at any stage, even post-Series A. We believe that a great deal of this risk stems from the lack of financial transparency and guidance. If you look at the statistics of founder backgrounds, almost all founders do not come from an accounting background. This means that they are more sales and operation focused rather than financially and administratively focused. From my time in the startup space, I have seen frivolous spending, unnecessary hiring, budget overruns that have led to mass layoffs, and lacking the focus on key economic drivers that VCs care about. A lot of founders are great at taking their idea from Zero to One” but lack the skillset to take from One to a Hundred”. Part of the reason is that founders simply do not have access to the substratum of information. I had founders personally tell me that they don’t know what their gross burn is and how many months of life they have left. As startups scale, it becomes apparent that they have outgrown their bookkeeper in complexity and scale but at the same time, they need to work with a solution that has a hands-on approach that fits the startup culture and needs. That’s what Aquifer is. 

Who are the senior people at Aquifer?

I started my career in Sales & Trading at RBC Capital Markets and later on moved into Corporate Finance at several industrial leading companies such as McCain Foods and Walmart Canada Bank. I eventually was hired at a fintech challenger bank which was one of the pivotal moments that led me to later on start Aquifer. I believed that many startups, like my employer, needed some serious financial clean-ups. I remember in my first week of joining the startup, there wasn’t a structured General Ledger, an accounting process, or any economic metrics for analysis purposes. There wasn’t a decent financial model, a lot of it was just some napkin math” which ironically raised them 7‑figures Series‑A in a very hot market environment. I asked myself Are all startups like this?”. The answer was Yes”. I wanted to provide more stability to startups and increase their chance of success. 

What is Aquifer your excited about (in the immediate horizon and in the long run)?

The COVID-19 pandemic, as awful as it was, jump-started Aquifer VB CFO. When I started my business, a lot of startup founders were very old-fashioned, stating that they were only looking for a full-time finance manager. To them, face time meant more value than capabilities. Towards 2021, as founders realized that remote work was going to be part of our society, we began to receive an influx of interest. At that point, founders cared about getting the job done rather than having as many bodies in an office space maintaining the persona of working hard”. Generally, we are excited about the future because we see an uptrend of VCs and founders looking at their businesses from an optimization perspective. We now live in a time when startups will have to showcase their ability to hit certain targets in a lean manner. To do all this, you’re going to need your accounting all figured out to guide you along the way. Lately, we have also received interest from venture capital firms to assist their portfolio and prospect companies with their accounting. It just goes to show that VCs are no longer handing out cheques like it’s 2016. With rampant inflation and a lack of funding from the public sector, it’s become marginally more difficult to maintain decent fund returns without cutbacks in cost. For the first time in our lives, startups will be scrutinized more than ever.