What is Strategic Finance?
Strategic finance professionals partner closely with executive leadership to:
- Analyze financial data and operational metrics
- Build forecasting models for revenue, costs, cash flow etc.
- Evaluate potential investments, initiatives, and strategic projects
- Develop long-term strategic plans and financial roadmaps
They serve as key financial strategists and advisors to the C-suite. Unlike traditional FP&A roles focused on budgeting, reporting and variance analysis, strategic finance takes a wider lens. Those in these roles need a comprehensive understanding of all aspects of the business model, industry landscape, competitive dynamics and market trends to properly evaluate opportunities, risks, and tradeoffs through a financial lens. This requires strong analytical skills, business acumen, strategic thinking and the ability to connect financial implications to overarching company strategy and vision.
Common Professional Backgrounds
Given the unique blend of finance, strategy, and cross-functional business acumen required, strategic finance teams often draw from various prestigious professional backgrounds:
Investment Banking
A classic feeder into strategic finance roles at both startups and tech giants. Investment bankers hone technical skills like financial modeling, valuations, transaction experience that are valuable for evaluating M&A deals, fundraising events, and major capital allocation decisions.
Example: An ex-banker from Goldman Sachs joins a fintech unicorn's strategic finance team to evaluate potential acquisition targets, advise on fundraising needs, and build detailed financial models.
Private Equity
Those from top-tier private equity funds have deep experience analyzing businesses, building LBO models, conducting due diligence on potential investments - skills that are highly transferable to strategic finance work.
Example: A former associate at KKR joins Microsoft's strategic finance group to help improve capital allocation processes across business units and evaluate potential buyout opportunities.
Management Consulting
Consultants from elite firms like McKinsey, Bain and BCG develop strategic thinking capabilities, data-driven decision-making skills, and cross-functional business knowledge that make them well-suited for strategic finance roles.
Example: Jane, an ex-consultant from McKinsey's Corporate Finance practice group in New York, joined Snap Inc as the Head of Strategic Finance. Her expertise evaluating business strategy from a financial perspective and advising clients across industries made her well-suited for this leadership role.
Why Strategic Finance Matters
In today's rapidly evolving digital environment, companies face major investment decisions amid constrained resources and new competitive threats. Having a strong strategic finance function provides a key competitive advantage by:
- Improving capital allocation and prioritizing highest-return initiatives
- Enabling more informed and data-driven decision-making with rigorous financial analysis
- Instilling financial discipline to ensure profitability, strong unit economics and efficient growth
- Properly evaluating strategic acquisitions, funding events, market opportunities and risks
As startups with aspirations of becoming tech titans and established tech giants alike increasingly rely on strategic finance for sound strategy, governance and decision-support, hiring and retention of top talent in this domain will remain crucially important. Those with the unique blend of financial prowess, business vision and strategic mindset will continue to be highly sought after.
