Alex Christodoulakis is co-founder of Wealthyhood, the app ‘to turn you into your own wealth manager’.
Alex shares his story about Wealthyhood, how he raised investment, and his advice for entrepreneurs:
Tell us about Wealthyhood and how you came up with the idea
A few years ago, together with Kostas, co-founder of Wealthyhood, we wondered how we could invest our money on a monthly basis. We were busy professionals at the time and couldn’t devote much time to research or execute any sophisticated investment strategies, and of course not in the position to actively trade the markets.
So, we spent time trying to identify what was out there to solve this problem. However, we soon realised we weren’t alone in that. The problem was everywhere around us. There was a typical question among our friends, family and colleagues: “How can I invest my money? I don’t have the time or the knowledge to trade…”.
But how will they do that?
Trading apps are usually too complex for beginner investors. They offer no guidance on how to get started or tools to create a long-term portfolio. They incentivise you to actively trade, by constantly notifying you for random price movements. Everyday investors get caught up on their emotions and end up gambling instead of investing. This was not the experience we were looking for.
So, we decided to build Wealthyhood to bridge the gap. Instead of just giving friendly advice to our friends, we decided to build a product that would guide long-term investors to build their wealth over time, by intelligently investing their money the way they want, with fewer fees.
It’s not only how our interactive guidance helps users to invest the right way, but also how we help them develop the right wealth-building mindset. You don’t have to be a millionaire nor an expert to have a successful and pleasant investing journey.
And this is how Wealthyhood was founded to become the first DIY wealth-building app for long-term investors.
Why did you decide to raise investment?
Unfortunately, Fintech is a very capital-intensive industry, even before you decide to spend aggressively on growth and marketing.
The initial costs have to do with securing regulatory approval and FCA compliance, even before you get started. And this is why we initially decided to raise some external money, alongside covering some operational costs and our plans to grow the team.
Apart from that, raising money from angel investors is a great way to validate your value proposition and showcase their belief in the vision of the company and the ability of the team to execute!
A successful angel raise doesn’t just get you money, but also access to the network and connections of your investors, so it’s a two-way process. The right investors can significantly accelerate our progress.
What is your top tip for anyone raising investment for the first time?
It’s always easier to approach angel investors, than early-stage VC funds. Start from your own network, pitch them your company and vision and then expand to your second degree connections, angel networks and of course the Angel Investment Network.
If you can’t persuade angel investors to invest in your company, then you should reconsider your pitch.
Always have a story to share; why you’re building this product, what’s the problem and why you’re the perfect team to succeed!
Any signs of initial traction are a great validation that you’re heading to the right direction.
What attracted investors to your company?
I think it was a combination of different things. Probably the most important is the problem we solve. Our angel investors immediately acknowledged the gap between trading apps and robo advisors and the need for a DIY wealth building app for long-term investors.
Our vision to create the wealth-building app not for the top-1%, but for the 99% fully resonated with them.
At the same time, our investors had faith in the team behind Wealthyhood and us as co-founders. The first angel investors were people from our close network with strong belief in our capabilities as a team. Then, friends of friends and finally professional angel investors, who got to know us better and believe in our determination and skills to execute.
Apart from that, we had already built some momentum, showcasing that we were heading in the right direction. We had more than 3,000 users signed up to our waiting list, over 10,000 followers in our LinkedIn and Instagram pages and had developed a community of 50 Wealthyhood Ambassadors across Europe.
Last, but not least, a few months ago we won 1st place on FinQuest Accelerator and are currently participating in the VISA Innovators Program, which for angel investors shows strong progress.
My biggest fundraising mistake was…
My biggest fundraising mistake was that we began by approaching early-stage VC funds, instead of angel investors.
This was wrong; it cost us time and money, but we soon realised it and switched our focus to angels, who were a much better fit for our stage and needs!
However, it helped us challenge our value proposition, improve our deck and positioning and make it more robust.
Why did you choose to use the Angel Investment Network?
Angel Investment Network was an amazing way to connect with the right investors for our company. It’s very time-efficient for founders and probably the best portal to share your story from a fundraising perspective.
It was first suggested by our advisors and we soon realised they were right to insist.
Our number 1 focus for Wealthyhood for the year ahead is:
To build the investing experience we envision and make it publicly available through a web platform, iOS and Android apps. We’ve already launched a beta version of the product and are onboarding the first users from our waiting list.
Over the coming months we want to onboard the whole waiting list and give instant access to new users in the UK and EU!
Keen to hear more?
If you would like to see what other companies are up to on Angel Investment Network, or are interested in raising fundraising yourself, you can find your local network here.
Each month on the Angel Investment Network blog we feature some of our start-ups making waves. Here are some of the ones to keep an eye out for in June:
Vitabeam has developed a patented LED technology that mimics the sunlight spectrum to stimulate plant growth, extend shelf life of food and kill unwanted pathogens, such as bacteria and mould.
Vitabeam has £1.72 committed sales, a pipeline of £6.5 million, and has received 2 Innovate UK government grants valued at £640k. Tests have shown biomass increase in herbs as high as 54% from using Vitabeam. You can click here to investigate on the best banking services available .
Mintago helps businesses save on their workplace pension tax bill, whilst improving the ‘pension well being’ of their employees. Mintago helps businesses to structure their pension in the most efficient way using HMRC’s salary exchange scheme reducing NI contributions, whilst rolling out pension optimisation tools.
Founded by the founder of Perkbox, and with the team ex RBC, BDO and Atomico, Mintago is growing at 100% MoM and saved customers over £250k despite only launching in December 2021.
KiKapay enables merchants to collect payments from customers in a manner that is typically 80% cheaper than card payments, by using their bank’s secure customer authentication process, and because it doesn’t require an app to be downloaded, KiKapay provides a frictionless solution.
With open banking payments increasing ten fold in 2020 and 25 billion card transactions having been processed in the UK alone. KiKapay has brought onboard an experienced team with 75 years experience, including a partner at Deloitte and the ex Head of Advisory for European payments at EY.
Addition offer a suite of financial services, from bookkeeping to growth funding. Their CEO Graham Davies explains in the guest article below how start-ups can benefit from having a portfolio CFO working alongside them.
When it comes to multi-tasking, entrepreneurs take the crown. Wearing a plethora of hats is pretty much a given. Not all roles can be juggled, however. A jack of all trades is a master of none – which is why a growing number of startups are choosing to outsource certain company tasks.
The average self-employed person spends an average of 12 working days a year on tax compliance alone. Time is golddust to entrepreneurs, and 12 days worth of drumming up new leads (or spending time with loved ones) is a lot of time to spend on something you may not even fully understand.
Accounts management as suggested by Archimedia Accounts and strategic outsourcing are beneficial in many ways. It isn’t only about saving time. Strategic outsourcing is usually a money-saver, too. This is especially true when it comes to accounting and financial planning. According to Glassdoor, the average CFO wage in the UK is £121,443 per annum. Taking on a full-time Chief Finance Officer is far too costly for most startups. However, they still look for these insights and advice to help them plot a course for growth.
This is why portfolio CFOs have started to become increasingly attractive.
But let’s take a closer look at this on-trend dynamic.
What Is a Chief Financial Officer?
A chief financial officer (CFO) is a senior executive who manages the financial actions of a business. Their duties typically include:
– Tracking cash flow
– Financial planning
– Analysing and acting on financial strengths and weaknesses
Essentially, a CFO oversees every aspect of your company’s accounts, finances and compliance. Their job is to ensure informed decisions are made to support the financial wellbeing of the business.
What is a Portfolio CFO?
Many startups choose to outsource their financial management to a third-party CFO. These high-qualified individuals usually work with agencies or freelance, and will manage multiple company accounts – or portfolios – at once. They will typically have extensive experience in their field, and offer dedicated services at a much more affordable rate.
Why are Portfolio CFOs so popular?
Startups are becoming increasingly attracted to Portfolio CFOs. But what is the chief driver behind this surge in popularity?
John Miller, Chief Operations Officer at Addition, links this rise to one simple factor: cost. Having previously served as CFO in green tech startup Spring, John now manages Addition’s CFO services. “Startups don’t require a CFO on a full-time basis,” He reasons, “as the cost is arguably not worth it. At £80k – £150k+ for a full time CFO in a startup to a medium company, this expense is often hard to justify.”
Of course, hiring a portfolio CFO is still an expense. However, the investment is well worth the cost. “The aim for all back-office roles, like finance, is to pay for yourself.” Says John, “Therefore, having a CFO on a part-time basis makes this easier in a small business. At £3k per month, it’s almost a third of the cost, whereas I would argue the benefits will not be a third of the size.”
Are Portfolio CFOs similar to Accountants?
As your startup grows, you’ll likely be advised to hire an accountant. This is definitely sound advice. Accountants will help with your tax compliance, bookkeeping and reports. But once the ball gets rolling faster and you’re looking to drive growth, a CFO can work wonders.
In order to appreciate what each of these roles brings to the table, you need to understand exactly what it is they do. “An Accountant or bookkeeper is focussed on implementing the rules and guidelines set out in the accounting standards for companies.” John explains, “This includes ensuring your company meets its statutory and tax obligations, accounts filed, returns processed etc.”
A CFO, meanwhile, is a strategic position in a company with the aim of driving the business towards its goals. “CFOs need a particular set of skills to do their job that accountants generally don’t.” says John, “One of the main skills needed is agile thinking – the ability to understand the ramifications from proposed or imposed decisions very quickly. For example: should business A start offering their online english tutoring business to China? The Portfolio CFO needs to quickly think about the ramifications of selling in China and the tax implications. They need to consider legislation, marketing the service in a different language, hidden charges and how to monitor progress. The role of a CFO goes beyond following the letter of the law – it involves creating strategic opportunities for growth.”
Portfolio or not, the CFO supports the startup on its journey and drives it forward in the most effective way possible. “Ultimately, an accountant and CFO work hand in hand.” John acknowledges, “It’s a symbiotic relationship, which is why at Addition we have a team made up of portfolio CFOs and bookkeepers. This gives our clients access to both elements required and is more economical to use both roles where they are best suited. There is no point in paying a CFO day rate to complete bookkeeping tasks.”
What does a Portfolio CFO do?
They might not be a full-time employee, but make no mistake: portfolio CFOs are definitely on your team.
During their contracted hours, a portfolio CFO will work as strategically and diligently for you as any of their full-time colleagues. Here are five of their main areas of focus:
1. Financial Management and Strategic Planning
Your portfolio CFO will implement controls so funds can be spent easily, but with solid regulations. They’ll help you determine where the business wants to go, and what it needs to get there. Finally, they’ll turn this understanding into a financial strategic plan.
2. Forecasting and Budgeting
This involves breaking the overall strategic plan into nuts and bolts. Your CFO might ask questions like, “How much are we going to spend – and hopefully earn – on all elements?” They’ll help adjust your budget to reflect this,
3. KPI and Performance Tracking
KPIs are vital to financial growth. A portfolio CFO will implement automated ways to periodically track performance to plan. They’ll help answer questions like, “What do we need to do more of – or less of? Do we need to do something completely different?”
4. Cash Flow Management
Cash is king for all startups. Staying on top of what is coming in and what is going out is vital for survival as well as success. Your portfolio CFO will help you utilise your cash-flow efficiently.
What Can a Portfolio CFO do for my small business?
While anyone can make use of a portfolio CFO’s services, the best fit are small to medium startups- especially ones who are focussed on operational delivery direct to customers.
You may wonder what scale ‘small to medium’ is operating on. “Once a business gets to a certain size,” says John, “let’s say 50 full-time employees and £25m+ revenue, getting a full-time CFO would be more economical.”
For John, this is due to the complexity of the organisation. “Someone who is fully focussed in the CFO role would be able to add the most value to that entity. Therefore businesses who are smaller than that, I would argue, may not get the full benefits for the cost of a full-time CFO.”
Establishing when the time is right isn’t always straightforward. For some helpful context, here are some examples of startups who’ve hired portfolio CFOS:
Example 1: A restaurant group with several sites. They’ll obviously have experience when it comes to running the restaurant profitably. However, a portfolio CFO could help with raising money to open a new site.
Example 2: A startup which has seed investment (before PE where it gets serious – a PE firm may want a 100%-focussed CFO to guard their investment and drive growth their way). This business is still in its infancy. The experience of a part-time CFO to guide the founders ideas will be vital to success.
Example 3: A hairdresser who is looking to expand into another site. A part-time CFO could spend some time working out a business plan for the new site. This would be presented to a bank to help raise the funds. The CFO could then track the performance of the site to make sure it is delivering the plan (and if not, help with what to do next).
Example 4: An online tutoring startup which may offer English courses all over the world. The tax treatments need to be carefully managed.
Example 5: A gym or fitness centre looking to sell. A CFO can support with financial reporting to give to potential buyers, as well as projections to support the valuation.
All of the above examples are in need of good financial management and leadership. However, they aren’t large or complex enough to require a full-time CFO within the business. Their main focus is on operationally delivering for their clients. This means a bank-office role such as a CFO isn’t needed daily.
“The CFO doesn’t help these example startups to cut more hair, offer more classes, or clean more flats.” John analyses, “Therefore in order to maximise profits, why not take on a part-time CFO?”
What Makes a Good Portfolio CFO?
When it comes to key traits and talents, portfolio CFOs and in-house CFOs fall under the same umbrella. Demonstrable experience and qualifications are obviously important. However, with portfolio CFOs managing multiple clients at once, commitment and dedication to each customer is more important than ever.
A stand-out portfolio CFO should be:
“When it comes to numbers, the CFO’s analysis and guidance needs to be true and actionable for the client on the journey to achieving their goals.” Says John, “Due to the portfolio nature of the role, this is a challenge. Dipping in and out of several businesses means focus cannot be 100% 24-7 – unlike that of the client with their business. Therefore, it’s about building solid advice on the facts of the business.”
A catalogue of prior experience with startups and goals similar to yours is key, according to John. “I’ve found that providing experience of how events have played out in historical scenarios really helps clients understand ramifications.” He says, “Failing that, it’s about drawing on the diligence disposition of a CFO to research, investigate and provide insight, as well as drawing on the network of contacts.”
3. A team player
As mentioned before, you’re not paying a CFO day rate for them to replace your bookkeepers. That being said, they should be working closely alongside your bookkeeper.
“30% of my day is spent with bookkeepers to ensure that all base financial data is strong, solid and makes sense.” Says John, “No analysis works without good foundations, which is why our Portfolio CFO’s are supported by a team of bookkeepers.”
4. A visionary
Once they have the necessary information, a good CFOs should make the most of it. “I use informed insights about my client’s business to give them actions that, when put in place, help them achieve their goals.” John explains. “Your CFO should be modelling out the future for your business, and helping set a course for the future. This could be help with raising money; working out which hires to make; whether to add a new product line and many other strategic decisions for small business.”
5. Clued in
A good CFO (portfolio or not) should always be aware of the latest financial guidance pertaining to your business. “10% of my day is spent researching the latest guidance from the government.” John states, “This is to ensure that we can provide insight on the latest legislation, as well as which grants could be claimed for.”
Advising multiple clients calls for an extra set of scruples. This is especially true when it comes to any potential conflict of interest.
“We have one set of clients where there could be room for connection. In order to ensure ethical practices, we divide the work between myself and my business partner.” Says John, “Were either of us in a situation where we were working on our own, we would not take on the work if we believed there was a conflict of interest. Our integrity is worth more than the paycheck.”
A good CFO should also keep on top of their ethical and professional requirements – as part of their membership to the relevant accounting bodies.
We all know how frustrating it can be to wait on a response from someone – especially where money is concerned. Along with the cost-effective perks of a portfolio CFO comes the fact that they can’t be on call 24-7.
“A portfolio CFO cannot serve all clients at the same time and immediately.” Says John, “Some startups value this more than the cost of full-time versus part-time. The biggest challenge as a Portfolio CFO is staying on top of multiple clients and prioritising effectively. The way we get around this at Addition is by having two portfolio CFOs to share the load. We also have a team of highly qualified accountants and bookkeepers to ensure the financial information is clean, robust and clearly presented.”
AIN members can obtain the following offers in our Perks & Benefits section.
1. Annual Budgets & Forecasting
Addition helps you plan your business’ journey for the next 12 months and transform your vision into an actionable finance plan. £1,500 per scenario – Angel Investment Network members get 20% off.
2. Financial Modelling
Every business decision has a financial impact. Addition creates a dynamic model for your company, based on today’s needs and tomorrow’s goals. £500 per scenario – Angel Investment Network members get 20% off.
3. Financial Pitch Deck Review
Addition has helped startups from pre-seed to to Series A and beyond. They know what investors are looking for when it comes to financial reporting and projections in your pitch deck. £650 per review – Angel Investment Network members get 20% off.