Are you hearing too much talk of UFOs right now and not enough talk of CFOs? Well, good news: in this special edition of Balance Sheet, we look at the CFO State of the Market 2023 report – our annual snapshot of trends and CFO sentiment. We've interviewed 30 CFOs from leading venture-backed companies, capturing how they're feeling ahead of a challenging year.

The lowdown

• 💔 EY expects ‘massive approval’ of plan to split up the company by year end.

• ☕️ Starbucks CEO Howard Schultz declines to appear at US Senate hearing regarding labor laws.

• 💸 Loss-making Reddit will aim for IPO in second half of 2023.

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CFO State of the Market 2023

Today we are looking at a couple of the conclusions from the report and where we can see these playing out.

1. Despite stories of mass layoffs, almost two thirds of the CFOs we spoke to are prioritizing growth for this year.

The news has seemingly been pretty doom and gloom, but the February jobs report showed that the US economy added more jobs than projected in January, with payrolls growing by 517,000 compared to an expected 185,000.

So, while there have been plenty of layoffs in tech, big agricultural and construction equipment manufacturers, for example, are elated with the tech talent pools they can now tap into. Twitter to tractor and tweet to wheat?

2. Following a blockbuster 2021, which saw a record $1.2tn in private fundraising, private markets have returned to planet earth, impacting round sizes and valuations.

This has triggered huge demand for debt. Where high valuations were once seen as a sign of success, they put companies in need of fresh capital in a difficult situation. We discussed how Arctic Wolf and Twitter were able to avoid the valuation question in December. (Spoiler: they ignored it).

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The content we're consuming today

• The CFO State of the Market 2023 report, obviously.

• The Closer podcast: Episode 1: The merger that made the world’s biggest airline.

• FT: Mariana Mazzucato: ‘The McKinseys and the Deloittes have no expertise in the areas that they’re advising in’ ($).

Off-balance sheet items

• If you are looking to brush up/learn about equity valuation, then you can’t do better than NYU’s Aswath Damodaran who provides free lectures and resources on his YouTube channel. The lectures are interesting and use contemporary case studies.

The bottom line