By Julio Martínez

When a startup takes off, it’s easy to mistake momentum for stability. MRR is climbing, new markets are opening, and hiring never stops. But for every early-stage business reaching new heights, there’s another quietly struggling to keep its financial foundations intact.

Scaling can expose weaknesses previously hidden within a smaller operation. Cash flow becomes harder to track, hiring becomes reactive, investments that once felt bold now look risky without a clear link to outcomes, and the same speed that fuels growth can also spark internal chaos.

This is where finance leaders come in. Their role isn’t to simply report numbers — it’s to bring clarity, consistency and control to a business moving too fast for its own good. The startups that survive this scaling mayhem are those that treat financial discipline as a growth enabler, not a constraint.

Seeing the full financial picture

Visibility is the foundation of resilience. You can’t navigate what you can’t see. As companies grow, financial data often lives in scattered spreadsheets or disconnected systems. That lack of clarity not only makes cash flow management harder, it also means leaders are blind to problems before they escalate.

Fixing this doesn’t have to be complex. Reconcile accounts, categorize spending and track the basics: recurring revenue, outstanding invoices and payments in progress. Even assigning one person to chase late invoices can free up cash and improve forecasting pretty much overnight.

Then build a rolling three-month projection with best- and worst-case outcomes. It’s not about predicting the future but rather about being ready to react quickly when it changes.

Finding the real drivers of growth

When growth goes wild, it’s easy to lose sight of where success really comes from. Headline metrics like total revenue or customer count rarely tell the whole story. The best finance teams dig deeper and break down performance by region, product and channel to see which areas are truly pulling their weight.

Numbers alone, though, don’t necessarily explain why something works. Finance leaders need to speak to sales, product and marketing to understand what’s behind the trends. Are conversions dropping because of pricing? Is churn higher because onboarding takes too long?

Blending financial data with real-world insight is where the smartest growth decisions happen.

Turning retention into predictability

Sustainable revenue doesn’t just come from selling faster, but also from retaining customers for longer. As companies scale, customer success becomes a cornerstone of financial stability. Mapping the customer journey helps identify weak points that cause churn.

Some of the most effective teams use a simple, visible customer health score. If an account shows signs of risk, it triggers action across departments before it’s too late. This shared visibility makes revenue more predictable and helps everyone see how their work directly impacts financial performance.

Making every investment count

In high-growth companies, speed often outpaces structure. Budgets expand, projects multiply, and suddenly it’s unclear whether spending is strategic or simply habitual.

To stay grounded, link every major investment to a measurable business outcome. For product and engineering teams, that might mean connecting roadmap decisions directly to revenue from expansion, retention or cost efficiency.

Keep this alignment in check with regular reviews and avoid quarterly scrambles. The best finance leaders ask why expenditure mattered, not what was spent.

Using talent data as a forecasting tool

Headcount is one of the biggest line items in any scaling business, as well as being one of the richest sources of insight. By linking hiring data with performance metrics, finance and HR teams can spot productivity patterns early. If certain functions consistently deliver above or below expectations, that informs future resourcing decisions.

Aligning incentives with company performance matters too. When bonuses and rewards are tied to shared business goals, accountability flows naturally. The result is an organization that grows in sync, not in silos.

A faster path to financial maturity

A financial transformation doesn’t need to take a year. In fact, 60 days is enough to create real change. Start with the foundations: clean data, consistent reporting and real-time visibility into cash and expenses. Then move to improvement by standardizing processes, identifying inefficiencies and linking operational data to financial outcomes.

Once systems run smoothly, embed them into daily workflows. Consistency is crucial as too many initiatives lose momentum just as they start to deliver results.

The bottom line

Fast growth is both a privilege and a pressure test. The startups that thrive evolve their financial practices just as quickly as their products.

It’s not about choosing between discipline and growth. Financial discipline is what enables growth to continue. By maintaining visibility, linking decisions to outcomes, and embedding accountability at every level, startups can turn fragile foundations into lasting strength.

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Julio Martínez is the co-founder and CEO of Abacum, a company specializing in financial planning and analysis software for mid-market firms. Abacum’s all-in-one platform enables CFOs to forecast revenue, plan headcount and account for unseen financial circumstances amidst tough macroeconomic headwinds. Under Martínez’s leadership, the company has expanded internationally, with its headquarters in New York City, and offices in London and Barcelona. Before co-founding Abacum, Martínez had a career in finance and technology. In 2018, he attended the Stanford Executive Program at Stanford University’s Graduate School of Business.

Related reading:

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Illustration: Dom Guzman

By Bob Morse

Over the years, I have experienced that sinking sensation of the investor-CEO disagreement in that first board meeting.

After the back-and-forth negotiation of the deal process, each side having played its hand, everyone gathers for that first board meeting and — surprise! One side or the other shares information or intentions not revealed pre-signing, in a way that can’t be easily reconciled between the private equity partner and the founder or CEO.

Through 25 years in private equity, I am not alone.

The nature of the frustration and emotion with the First Board Meeting Surprise is not that something arose post-investment: It is that something knowable in advance of the deal comes to light after closing and is a material change to expectations.

The surprises I’m referring to don’t arise from bad actors trying to intentionally mislead. In fact, it’s because they regularly occur among well-intentioned individuals that these surprises are so maddening.

Case in point

For instance, consider the operating partner who shows up at the first board meeting and shares vetted candidates to replace an executive the CEO feels loyal to.

The CEO wonders why he was kept in the dark about his new investor’s view on this key executive before signing. Perhaps, thinks the CEO, there are other things I wasn’t told. The new investors wonder why the CEO is reluctant to build an “A” team. Perhaps, thinks the operating partner, this is not our kind of CEO. Neither side backs down; both feel justified. That is a First Board Meeting Surprise.

It’s embarrassing for all concerned, and it happens more frequently than we’d all like to admit. Research from Alix Partners found that roughly three quarters of portfolio company CEOs are replaced during a fund’s hold period, with a majority of those happening in the first two years.

While the sponsor and the founder/CEO want to be aligned, the dynamics of the investment process work against them.

The purchase of a company is a one-time, distributive negotiation with large dollars at stake, and it can be adversarial, full of tension and tiring. On the other hand, the relationship between investor and CEO in operating and building a company is a repeat-player game. That game requires a completely different approach.

Stay prepared

Our solution to the First Board Meeting Surprise problem is to adopt repeat-player thinking before signing the deal. What would happen if our underwriting plans — due diligence findings, best “secret sauce” ideas, and proposed actions — were shared with the founder and agreed to in writing before signing the deal?

It’s not without risks. The founder/CEO might see our work and insist on a higher price, shop those ideas to a competing bidder, or simply adopt our best ideas without taking our investment at all. The founder/CEO might disagree with the course of action entirely and simply walk away. We then lose a deal we could otherwise have closed.

But perhaps the founder/CEO would be excited about the action plan, provide input to improve it, and refocus their energy entirely on where we were going to go together. And, because nothing knowable in advance of the deal on our side would remain hidden, and reciprocal engagement from the founder/CEO on the plan would reveal their true views on critical items, there would be no First Board Meeting Surprise.

Putting this into practice can feel risky for those used to the traditional information-control approach to closing deals. It was for me. Just before founding Strattam Capital, I was trying to recruit a CEO I held in high regard to lead a new platform investment we were evaluating.

He was wary, so I shared our underwriting and diligence. He insisted that we commit to building out a full product suite and adding to the leadership team, so I went to the investment committee and secured an upfront commitment for follow-on capital. Ultimately, we put a set of five actions down on a single page, shook hands, and only then signed the deal.

On the day the deal was announced, he shared that action plan in his all-hands meeting, and it formed the agenda for the first board meeting. Intermedia grew several-fold in size to become a UCaaS leader. I have that one-pager framed on my desk today.

The five-point plan

We turned that approach into a process we call the Five-Point Plan, which requires us and the CEO to agree up front on post-transaction actions. That means we not only agree on the five key actions to take after the deal closes, but the CEO knows he or she has the resources and support to execute them. More importantly, we’ve eliminated the problem of the First Board Meeting Surprise because no one has any surprises to share.

We have accepted that the price for materially improving sponsor-CEO alignment in the deals we do close is that we will lose some deals we could have closed but for agreement on the Five Point Plan. In practice, we have closed several dozen founder-led deals versus a handful of walk-aways. Both we and the founder are better off without doing those deals where we would have discovered a fundamental disagreement the day after closing.

Expecting the unexpected

Of course, the world always intervenes, and the moment the deal closes, events unfold: tariffs, interest rate changes, AI breakthroughs and so on. While we all expect the world to change around us, there are some surprises we can avoid.

We can minimize the risk of friction between the CEO and Board due to differing goals. We can begin our repeat-player relationship before signing the deal.

In the founder-led technology buyouts, we believe that a more transparent pre-signing investment process, like our Five-Point Plan, is the most promising way to begin a partnership between a private equity sponsor and a founder/CEO. I am sharing this approach in the interest of encouraging others to experiment with it. Consider showing your hand more openly before closing. Invite the founder/CEO to do the same. See what happens.

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Bob Morse co-founded Strattam Capital in 2014 and is managing partner. He has served on numerous private and public technology company boards, and currently is a director of CloudHesive, Contegix, Daxtra, Green Security, Resource Navigation and Trax Group. Previously, he was a partner and member of the investment committee at Oak Hill Capital Partners. He also worked at GCC Investments and Morgan Stanley. Morse serves on the board of directors of Austin PBS and as member of the advisory board for the HMTF Center for Private Equity Finance at The University of Texas at Austin McCombs School of Business. He attended Princeton University, graduating summa cum laude with a B.S.E., and Stanford Graduate School of Business, where he earned his MBA and was an Arjay Miller Scholar. Morse lives in Austin, Texas.

Illustration: Dom Guzman

By Mark Grace

New York Climate Week 2025 is in the rearview mirror and COP30 is approaching swiftly. Now is a good time to take stock of the themes that are top of mind in the conversations that I have had with founders, operators and other investors in the space.

Unsurprisingly, the theme of 2025 is AI, but there’s just one catch.

AI is about to break the grid

For the first time in two decades, electricity demand is increasing, in large part due to the growth of data centers and computers. That’s not slowing down: Demand is expected to increase more than 30% over the next decade, yet the current energy grid is ill equipped to handle that transition.

The grid is already under strain, and Americans are feeling the pain in a variety of ways: Average electricity prices nationwide increased 5% from July 2024 to July 2025 and more than 20% in some states. Outages have increased as well, with the average American experiencing 61% more outage time in 2023 vs. 2013. We’re paying more for less.

But the question isn’t whether we can afford it. It’s whether our top-down model of centralized utilities can build fast enough to meet demand. The path forward requires both optimizing what we already have and building what we need next.

Modernizing the grid we already have

While that may be true, the first order of business is ensuring that existing energy assets work effectively and reliably. Investment dollars are flowing to modernize the existing grid and mitigate vulnerabilities to ensure that grid physical assets are sufficiently resilient to withstand the strains of increased energy demand and extreme weather. Fortunately, a host of companies are innovating in this critical space to address these challenges.

Among the key players, Rhizome offers AI-driven climate risk analytics and resilience planning for utilities, while ThreeV Technologies provides visual data management and asset intelligence solutions. Gridware has developed a continuous grid-monitoring platform that helps utilities maintain real-time awareness of their infrastructure. Together, these companies represent some of the cutting edge of grid modernization efforts, combining advanced technologies like artificial intelligence, visual analytics and continuous monitoring to strengthen the backbone of our energy system.

Investing in this space is critical to reverse the trend of increased utility outages — which have already increased materially over the past decade (mostly in part to weather).

Increasing energy capacity is the second to-do, yet we’re falling behind. The U.S. will add about 63 GW of utility scale capacity in 2025, whereas China added about 429 GW of capacity in 2024 — nearly 7x that of the U.S.

The solution is at the edge

Fortunately, innovation comes at the edge, and there is strong momentum around scaling energy in a decentralized manner — the solution is bottom-up capacity growth through distributed energy resources such as rooftop and battery storage systems — quite different from the legacy systems in place today.

The growth in distributed solar is proof that this is working: Of the 32 GW of solar capacity installed in 2024, 5.4 GW was distributed (defined as residential, commercial and industrial, and community solar). Rates of attaching battery storage systems, which resolve solar’s intermittency issues, continue to climb as well with over 79% and 61% attachment rates in California and Texas, respectively, in H1 2025.

These stats are proof that distributed energy is feasible, and now the onus is on scaling. Cost has traditionally been a large barrier to consumer adoption, although that is changing with residential solar costs dropping more than 60% from 2010 to 2020. However, soft costs (sales and marketing expenditures) and financing costs have masked many of those efficiencies. This has partially been offset through federal tax credits, but per provisions in the OBBB, these will soon be phased out and leave behind considerable adoption hurdles.

Decentralization as a coordination infrastructure

Startups are responding. Consumer energy businesses like Daylight Energy 1 are using crypto-based networks to align incentives between homeowners and the grid. Instead of waiting for utilities or governments to fund new infrastructure, the Daylight Network rewards consumers in exchange for participating in their virtual power plant. The goal is to circumvent the range of expenses — hardware purchases, soft costs and financing costs — that have hampered consumer adoption to date and turn energy consumers into active participants in the grid.

In a world where we can’t wait for governments to catch up and solve the set of issues that are straining the grid (and getting worse every year), startups have to step up with organic bottom-up tools to scale energy generation.

From device coordination to financing to better energy management systems, there are ample opportunities for improvement. As a result, there is also ample opportunity for venture dollars to help these companies, whether it be investing in the businesses that manage the electrical load directly or providing the picks and shovels.

The private sector can drive the transition faster than public systems. AI is not slowing down, and neither is climate volatility. We need to scale the energy infrastructure that serves as its backbone.

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Mark Grace is a principal at M13, a Santa Monica, California-based early-stage venture firm.

Photo by Andrey Metelev on Unsplash.

By Matt Blumberg

AI hype is reaching a tipping point. Every brand is racing to stay ahead of the adoption curve, but not every approach yields the same results. In the first half of 2025, billions of dollars flowed into the U.S. AI startup ecosystem. But the game has changed. We’re entering a “post-ChatGPT era,” where generative AI isn’t a differentiator, but a necessity.

If a founder wants their AI startup to stand out and lead the next wave of innovation, it needs to be more than AI-enabled. That’s why today’s founders need to embrace an AI-native strategy.

Why does being AI-native matter now?

As a repeat founder, I’ve learned the value of this through relaunching a legacy brand as AI-first. Just bolting on AI isn’t enough to stay competitive. Founders need to cultivate reinvention and operate like an AI-driven company from day one.

If you’re still tacking AI onto your product as an afterthought, you’ve already fallen behind. Being AI-native matters now more than ever as it’s the foundation of market competition.

This next generation of startups will shape their architecture, go-to-market strategy, and customer value proposition as AI-first. This requires an important mindset shift to begin solving problems created by AI.

Existing startups may rethink their approach. Ask yourself, “If we were starting this company today, how would AI define our business?”

AI-native startups are positioned to thrive

Adopting an AI-at-the-core mindset comes with clear competitive advantages.

• Growth often comes with risks in the startup space, especially when it veers from established timelines or roadmaps. An AI-native approach allows teams to scale at startup speeds without burning out. They’re given the ability to automate, experiment and deploy faster with fewer roadblocks.
• Personalization drives a huge portion of customer demand in terms of what they expect from their digital journeys. AI and automation play a clear role here, providing startups with the ability to tailor products, services and experiences in real-time.
• Staying agile and adaptable in a turbulent tech economy is crucial. AI-native companies pivot with market changes and evolving customer needs with less friction, all built upon an adaptable, reliable infrastructure.

Trust as a cornerstone of AI strategy

AI clearly offers companies practical advantages and solutions to common startup pain points. But embedding AI is more than rebranding and deploying models into workflows. It’s crucial to cement responsible practices as well.

The promise of AI is powerful, but founders can’t afford to ignore risks around data quality or misinformation. These concerns remain very real for customers, employees and potential investors.

Founders need to be champions of responsibility and accountability by designing governance and guardrails into their startups’ core.

The result? AI-native companies that move fast and build lasting trust.

Lessons from a repeat founder

The founder’s playbook has changed. Just a few years ago, you could build powerful human-centered products and add automation later. Today, founders must operate differently.

• Tackle the real challenge: Don’t build another LLM wrapper. Real, defensible businesses solve the new problems created by AI, such as governance, security and verification.
• Assume AI adoption: Build for customers who are already using AI and grappling with the complex consequences. Your product should make their AI strategy safer and more effective.
• Turn speed into your superpower: The window to build and adapt is shorter than ever. Your ability to learn and pivot faster than your competition is your greatest competitive advantage. Long-term, static roadmaps are a liability.
• Prioritize trust: In a world of infinite AI-generated content, trust is the most valuable asset. Focus on tools that ensure accuracy, reliability and brand integrity.

My experience has taught me to listen to the market, especially when it tells you to change.

The winners in this next chapter of startups won’t just use AI to make things faster or cheaper, they’ll leverage it to make their businesses safer, more reliable and adaptive to a changing world.

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Matt Blumberg is the CEO of Markup AI and has more than 30 years of leadership in scaling global disruptive technology businesses. Before launching Markup AI, he successfully launched and led brands and companies including Acrolinx, MovieFone division of 777-FILM (acquired by AOL), Return Path (No. 2 on Fortune Magazine’s “Best Companies to Work for” list and later acquired by PSG/Validity), the nonprofit Path Forward, and Bolster, a disruptive platform for executive search in the tech industry.

Illustration: Dom Guzman