How to Build a Flexible Financial Stack from Day One

Immad Akhund

Mercury is the fintech company that offers banking* for startups of all stages and sizes, trusted by more than 80,000 companies like LMNT, Lendtable, Phantom, Sprig and more. They’re also funded by some of the sharpest VCs in the Valley, from a16z to Coatue to CRV. 

For the first piece of our two-part series, we sat down with Immad Akhund, Co-founder and CEO of Mercury, to explore his best financial practices for early-stage founders. We dive into: 

  1. How to sequence your financial priorities as a founder
  2. Why you should invest in a flexible finance stack
  3. Two reasons why most startups bleed cash
“As a young startup team, you don't want to staff up for extraneous finance tasks too quickly. Early on, that can definitely increase your burn.” 

How to Sequence Your Financial Priorities as a Founder

From day zero until they nail their product-market fit, founders should focus on: 

  1. Outsourcing as much as possible
  2. Prioritizing simplicity

From a stack perspective, founders should start with a basic, all-online bank account. Mercury is your best option for that. Meanwhile, Stripe is the standard choice for card processing, and many startups use QuickBooks for accounting. 

If you’re super small and haven’t raised any funding, you can still manage your own banking and bookkeeping since transactions are relatively small and simple. 

Once you raise money, Immad recommends turning to an external firm for those functions like Pilot. The Mercury team uses them to this day. 

At a glance, you won’t need an internal finance hire until you’ve done your Series A. Otherwise, executing every step of your finances by yourself just gets too painful. 

That first finance hire is ideally multi-faceted, so they can help manage accounting, assist with fundraising and FP&A, invoice customers, pay invoices, etc. 

Even then, in Immad’s experience, CEOs need to remain close to the financial side of things. 

They need to talk to their finance team often and competently, especially in fundraising situations. They should also actively know: 

  • Which costs are appropriately vs. inordinately expensive
  • Where each dollar of revenue is coming from and what the shape of it is
  • Whether there’s too much of a concentration of revenue coming from one customer

Overall, it makes sense to outsource the mundane stuff like bookkeeping and accounting. But CEOs must always and completely understand the state of their company’s finances. 

Review Your Core Financial Metrics Once Per Month

Immad recommends that all founders look closely at their P&L at monthly intervals to ensure the company isn’t wasting money. It may sound infrequent, but many execs unfortunately neglect to do even that. 

If you’re doing the books yourself, look at every single transaction once a month. 

If someone else is doing the bookkeeping, have them send you a spreadsheet once a month. Go through every row of sums and see if costs were as expected. Often, you’ll come across something that requires further digging. 

Since you caught the issue early, you can solve it and gauge how concerned you should be based on your current runway. 

Mercury and other tools also enable teams to set up alerts. If any money above a certain dollar amount moves out of your account, you can check in immediately. 

Why You Should Invest in a Flexible Finance Stack

To find the ideal early-stage stack, it’s essential to have a network of working entrepreneurs — think 5–6 other founders who are slightly farther along than you in terms of growth. 

Someone years down the road from your stage won’t be as helpful as the fellow early-stage leader who’s recently undergone similar, applicable experiences. 

Along those lines, acquire tooling that’s appropriate for your scale. Don’t waste time trying to utilize products or platforms designed for scaled-up enterprises. As your startup grows, you can design for flexibility so it’s easier to retool your finance stack down the line. 

So, stick to the startup tools; they’re designed for simplicity and priced accordingly cheaper. 

Nowadays, there are so many ways to find members of your industry who could potentially provide applicable advice. Founders can look toward in-person connections and seemingly endless online communities, from standard LinkedIn to Twitter hubs. 

But, to identify the most applicable and reliable players in your space, ask questions like: 

  • Who is giving me this advice? How might that bias or skew the advice? 
  • What’s their actual experience in the field? How exactly could it map onto my current experience? How does it differ? 
“For specific, directed advice, find companies that are similar to you in some way. Startups aren’t going to Fortune 500s to ask, ‘Which people do you use?’” 

Two Reasons Why Most Startups Bleed Cash

There are two major places to look for waste: hiring and unit economics. 

1. People Are Your Most Expensive Variable

Simply put: People cost a lot of money. Avoid overstaffing, especially in the early stages. 

This often occurs because startups simply don’t have a high bar for hiring. The process is so difficult that they figure they should just accept the first reasonable candidate that lands on their desk. Immad cautions against this strongly. 

He points out that it’s better (and more financially efficient in the grand scheme) to have one expensive, highly competent engineer than it is to have a few cheap, unproductive engineers. 

Tools like Startup Runway can help you understand, manage, and extend your runway – especially when considering headcount and hiring variables.

2. Ignoring Unit Economics Will Only Hurt You

If it’s a situation in which users have a large variable cost associated to them,, things can get expensive — quickly. 

For instance, if acquiring users via Facebook ads is already expensive for you, that’ll only continue to add up. Or, if you have any fraud weighing you down, it’ll scale with you. Anything that is variable on a per-user basis can and likely will be a capital drain. 

As mentioned, ads are usually the biggest cost on this front. But, depending on the company, that cost can also look like logistics ops if you’re doing a lot of DTC fulfillment. 

Overall, regardless of your category or specific business model, founders should consider the financial impact of doubling in size — especially what will wind up costing them 3x. 

“These two hiring mistakes — hiring the wrong people and hiring too much — are by far the most expensive missteps that early-stage startups make.” 

*Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust®; Members FDIC.

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The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Information about the company is provided by the company, or comes from the companies’ public filings and is not independently verified by LTSE. Neither LTSE nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding LTSE-listed companies are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. Advice from a securities professional is strongly advised.
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