Welcome back to Office of the Venture CFO, our monthly series where we talk to the people running finance at top venture firms.
This month, we’re sitting down with Chris Huether, CFO at Inspired Capital. Chris didn’t come up through Big Four or traditional venture. He spent years running finance at a 30,000-person organization before helping build Pruven Capital, an independent single-LP fund, from scratch. Now he’s CFO at one of New York’s most active early-stage firms.
We get into what it takes to structure a corporate venture program with real teeth, what changes when you go from one LP to many, and how he spends roughly a quarter of his time working directly inside portfolio companies as a resource for founders.
The transcript below has been edited for length and clarity.
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THE NON-TRADITIONAL PATH
Venture5: Give us the origin story. Your background is pretty different from most people in your seat.
Chris Huether: I didn’t grow up in the venture space. I wasn’t a Big Four accountant and I don’t come from that background. Mine is more 30,000-person organization down to now a 15-person team where I’m involved in everything, soup to nuts. I was a finance and accounting grad coming out of school in the middle of the financial crisis. I thought, why not go to a bigger company that seems stable and get broad experience? So I did a variety of different roles. M&A, IR, corporate finance, treasury work. All within the finance and accounting suite.
Venture5: And then Pruven Capital came along.
Chris Huether: Right as COVID was starting, Prudential decided to launch an independent venture firm, which ultimately became Pruven Capital. I was one of the few people on the East Coast who said sure, I’ll move to San Francisco. I was CFO and COO, and it was very much go stand up a firm, build it out with an institutional focus. It took a lot of my IR and finance background, but blended in a lot of startup-type work too. How do you run payroll? How do you set up retirement? Fast-paced, super interesting. A few years later, here at Inspired, I’m doing a similar role with a very different LP base and a much earlier-stage focus.
“Mine is more 30,000-person organization down to now a 15-person team where I’m involved in everything soup to nuts.”
WHAT THE BEST FUNDS ARE SHOWING LPS (AND WHY TVPI ISN’T ENOUGH)
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Peter Walker runs the Insights team at Carta, focused on discovering key data and narratives across the private capital ecosystem. In a former life, he was a marketing executive for a media analytics startup and led the data visualization team at the Covid Tracking Project.
The transcript below has been edited for length and clarity.
Venture5: Have you seen CFOs leveraging Carta data or third-party benchmarks in ways that go beyond the standard fund performance view? Whether that’s informing portfolio construction for the next fund or just changing how they communicate with LPs?
Peter Walker: Totally. A lot of funds are doing the straightforward version of this, which is here’s our fund performance, here’s how it compares to other fund performances. That’s table stakes at this point. What I find more interesting is the additional metrics beyond performance. Things like loss ratios, graduation rates, tier-one markup percentages. I see those fairly often.
“The best funds are much more open and much more rigorous about how they’re collecting data from portfolio companies and showing it to LPs. Not just ‘here’s our TVPI, hope it looks good.'”
The more nuanced stuff comes down to SAFEs and whether or not you’re marking them up. A lot of emerging funds are actually having to build two sets of books. One around the pure markups, the priced rounds. And the other is more like, here’s what’s going on in these portfolio companies and why we’re so excited about them, whether that’s revenue growth, churn, or other portfolio KPIs. They’re having to show both to their GPs and their LPs.
You have to go a layer deeper these days. The best funds are getting into the underlying companies and showing growth paths, even if a company hasn’t raised a priced round in a couple of years, because the timing is just so far off what it used to be. You’re being required to do more.
Venture5: That tracks with what we’ve been hearing from CFOs through this series. There’s the numbers on the tin, but then there’s the underlying story. The folks doing it well are saying, these are two different views, and we’re going to share both and walk you through why they look the way they do.
SPINNING UP A CVC THAT STICKS
Venture5: For people thinking about spinning up a corporate venture function inside a larger organization, what would you caution them about or tell them to get right from the start?
Chris Huether: Pruven was structured as an independent firm. Yes, there was one LP, and it was tied to some of their strategic priorities, but at the end of the day, decision-making and autonomy were key. From an investment committee perspective, the team had carte blanche to do deals that fit within the LPA. Having it set up as a separate entity removed a lot of the politics and friction and slowdown that can sometimes happen within more traditional corporate venture programs.
Venture5: And you still needed strong buy-in from the parent.
Chris Huether: Strong executive sponsorship is critical. If you don’t have the C-suite sponsoring it, it’s going to be really hard to get the rank and file engaged, involved, helping drive pilots and POCs with portfolio companies. That’s where you get the strategic value alongside the financial value. We had the best of both. Structural independence and executive sponsorship.
Venture5: Was there ever a real debate about the single-LP structure versus bringing in other strategics?
Chris Huether: A lot of discussions, even as the second fund was being raised. The large corporate names we talked to in financial services and real estate were all wrestling with the right structure. Some went with a SWAT team off to the side. Others fully integrated with all their business units. And some said there’s going to be so much turnover internally, let’s outsource it. Be an LP in a fund with a bunch of other strategics. What I came to believe is that the independent structure is genuinely compelling. You can hire good talent because you have a traditional two-and-20 setup, so you’re getting people who are in it for the long haul. But you still have strategic sponsorship from the LP, which is what you’re delivering to portfolio companies in the first place.
“If you don’t have the C-suite sponsoring it, it’s going to be really hard to get the rank and file engaged, involved, helping drive pilots and POCs with portfolio companies.”
ONE LP TO MANY: THE TRANSITION
Venture5: You went from a single-LP structure at Pruven to a much more diverse LP base at Inspired. What surprised you about that shift?
Chris Huether: A lot of things scale naturally. Reporting obligations go from one to a multitude. But there are other dynamics. If you need LPAC approval on something, or you need to socialize a concept, how do you roll that out across a much broader base? And you’re going to have folks who are extremely seasoned like pensions and endowments, and you’re speaking the same language. And then you’ll have individuals, family offices, high net worth individuals, where you’re spending a lot more time explaining things, walking through concepts, giving updates on companies.
Venture5: How do you modulate communication across that range?
Chris Huether: The spectrum of people and backgrounds that we have is extremely diverse at Inspired. And that brings with it some challenges, but a lot of opportunities and interesting insights that come from those discussions too. Things they’re seeing from the other funds and managers they’re involved with, which could be in venture, private equity, real estate. When we engage with them, the perspectives they bring are really interesting.
“The spectrum of people and backgrounds that we have is extremely diverse at Inspired. And that brings with it, yes, some challenges, but a lot of opportunities and interesting insights.”
THE CFO AS A RESOURCE FOR FOUNDERS
Venture5: You mentioned spending roughly 25% of your time with portfolio companies. What does that look like in practice?
Chris Huether: It ranges pretty widely. At the early end, it’s a CEO who’s just getting off the ground and needs help thinking through anything. At the other end, a company that has a head of finance or CFO in place and needs help looking at a debt line, negotiating vendor contracts, or thinking through a three-year business plan they’re putting together. Because we’re making roughly ten investments a year and sitting on the board in almost all of those cases, I see across 75 or 80 companies. That perspective comes from sitting across so many situations. I can tell them what’s market and what’s not, what to push back on, where they’re leaving something on the table.
Venture5: Walk us through a debt process specifically. What’s your role from first conversation to close?
Chris Huether: It usually starts with the strategic rationale. How are they thinking about it, what have I seen other companies consider at a similar size and stage. So a lot of it is market intel and what I’ve seen across other companies. Once they’re actually through certain processes, I’ll help them review documents alongside them and their lawyers and look at terms. What’s market, what’s not market. Maybe tactically, this is something you should focus on and push back on. And then in some instances where we or I have relationships, I’ll make phone calls on their behalf. So they don’t feel like they need to be the ones being the bad cop. That exists whether it’s hiring, cap structure, financial transactions they’re looking at.
Venture5: How do you make sure that involvement is welcomed?
Chris Huether: I think it’s two things. One is recognizing where I feel like I actually have unique insights and I’m not just flying in, giving a perspective and flying out. I actually feel like I bring a unique point of view based on my experience and background. People respect and appreciate that a lot more. I very much focus on the things that I know well or people that I know and leverage that, versus being super broad in what I offer. And two, in most instances it’s at the suggestion of the founder themselves or the investor on our team. I try not to be pushing versus letting them pull me in where they think they need some help and expertise. And then I try to make it reasonably targeted.
Venture5: You’re also on the board of VCBC. For folks who aren’t familiar, what is it?
Chris Huether: I can’t say positive things enough about VCBC. When I moved to the Bay Area to work at Pruven, my boss at the time introduced me to a friend of his who had a CFO on his team. She happened to be on the VCBC board at the time. She said, if there’s one thing I can recommend as someone new to the industry, trying to learn a lot and meet a lot of great people, join this organization. You will never regret it. Six years later, I haven’t. What started as more of a tight-knit Bay Area CFO-focused organization is now 600-plus people all across the US and global. During COVID, the Slack channel became a lifeline for a lot of people who were cooped up at home and couldn’t go to in-person meetings. As a board, we’re focused on the programming end of things. It’s probably one to two events a month, social events and technical events on compliance, legal, or tax. Topics that are of interest for the broader finance community. I’m excited now to be sitting on the other side, able to give back and help the next generation of folks.
“I try not to be pushing versus letting them pull me in where they think they need some help and expertise. And then I try to make it reasonably targeted.”
About Chris Huether
Chris is the CFO at Inspired Capital, where he manages all financial and internal operations of the firm. After nearly a decade in public markets, Chris found that venture capital channels his passion for building and solving complex problems. Prior to Inspired, Chris was the CFO of Pruven Capital, an independent venture firm launched in partnership with Prudential. Before that, he worked on Prudential’s IR and M&A teams, helping the company engage with investors and sell-side analysts and completing over $500 million in acquisitions globally. Chris is also a member of the Board of Directors of VCBC, the largest industry association of venture capital finance professionals. Chris holds an M.B.A. from Columbia University and a B.S. in Finance and Accounting from Lehigh University.
