The Chief Financial Officer’s role once focused on core accounting operations like AR/AP and FP&A. Today, the Office of the CFO (OCFO) is the strategic hub of modern enterprises. It influences everything from HR and risk management to the deal desk.
This expanded role has sparked a wave of products aimed at optimizing the often-painful workflows that fall to CFOs. The new category is catching investors’ attention, with some viewing it as the next big disruption in enterprise software.
“Today, OCFO is as core as it gets. All our investments touch OCFO in some way,” said Jonathan Wulkan of HG Capital.
At Jefferies’ fourth annual Office of the CFO Summit, leaders from 75 companies and nearly 175 investors gathered to discuss key trends, opportunities, and challenges in this growing space.
This recap covers a panel of four private equity investors in the OCFO space:
- Peter Christodoulo, Francisco Partners
- Jonathan Wulkan, HG Capital
- Matthew Dorr, General Atlantic
- Andrew Ren, Permira
How Did OCFO Become a Focus for Investors?
The OCFO category is still new—just a few years ago, it wasn’t on the radar of entrepreneurs or investors. Mr. Christodoulo explained the category’s emergence, charting CFOs’ evolution from accounting to a broader, product-centric role.
“I first heard the term ‘OCFO’ five years ago,” he shared. “The CFO’s role used to be mostly focused on things like accounting, AR/AP, FP&A, and Treasury. But gradually, a CFO’s role has grown as areas like payroll have led into HR and areas like billing have led into subscription and consumption billing. Now, CFO roles are heavily intermingled with products. It’s almost similar to fintech 15 years ago.”
For investors, this shift signals opportunity. Because CFOs’ focus was historically narrower, centered on core accounting operations, much of the innovation in other areas of the enterprise is only now starting to influence their job functions. Manual processes and legacy solutions still dominate CFO workflows.
“The biggest tailwind for OCFO is that this category has traditionally been seen as being in the background. Now, the OCFO is one of the loudest voices in the room, and that brings bigger budgets and a need for better technologies,” Mr. Ren shared. “The category is really exciting.”
Software Investing Is Down–Is OCFO The Exception?
Private equity and venture capital investment in software declined 51% year-over-year in 2023, as high interest rates and declining public-market valuations buffeted investors. With a new rate cutting underway, Jefferies asked the panel about their outlook for OCFO investing in the second half of 2024.
The response was clear: they’re open for business.
In discussing the future of OCFO investing, panelists highlighted a trend familiar to enterprise software investors: the shift from point solutions to platforms. As the OCFO role expands to cover more diverse functions, investors are seeking products that support the full stack, rather than individual functions.
“(OCFO products) should track the movement of data and money from the customer journey through internal systems. We think that there are great partnership opportunities between front and back-office software tools and payments platforms. From the OCFO perspective, it’s one continuous journey.”
Does the Sector Face Headwinds?
From an investor perspective, the panelists pointed out a few headwinds facing OCFO.
- Mr. Wulkan noted the influx of new entrants into the market. What was once a nascent category is becoming increasingly crowded, with more competitive bidding.
- Mr. Christodoulo mentioned that, like most sectors, OCFO hasn’t been immune to the high-rate environment of recent years. Businesses have had to adjust their cost structures, and in some cases, growth has slowed.
Despite these challenges, the overall sentiment was that OCFO remains a fast-growing and exciting sector—one that’s really just getting started. For more insights on OCFO and its trajectory, check out Jefferies’ interview with Evan Osheroff, Managing Director for Software Investment Banking.
