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The AVL Backstory: How Colorado’s First Full-Stack CFO Firm Is Shaking Things Up

Chris Schwalbach  ·  November 6, 2019  ·  9 min

Though AVL has now been in business for 10 years, Chris Schwalbach is as excited by the company and its mission as he was in the beginning. 

For Schwalbach and his team, the AVL model allows them to continually feel the rush and the challenge of new opportunities every time they take on a new client. 

It’s working. As Colorado’s first full-stack, fractional CFO firm, AVL has helped thousands of founders and business owners and more than 700 businesses raise over half a billion in just over 10 years.

But that is only part of the AVL story.  

A Value Proposition for Clients and Employees

Schwalbach offers a great value proposition for the companies who engage with AVL, but also for the CFOs, accountants and controllers he hires. 

“They’re not here for a massive number,” explains Schwalbach. “They’re here for a number that’s meaningful to the hours they put in. Consistent across our team is that they have other great priorities and passions in their lives that they don’t want to give up or deprioritize as a result of having this passion for helping entrepreneurs.”

“We live in Colorado. There are skiing and biking opportunities, and the outdoors is important to us,” says Schwalbach, a fan of all things outdoors. “But for our people, it’s also family pursuits. Others want to travel.”

The AVL model translates into CFOs having white space in their day. This increases their ability to be responsive, to be thoughtful, and to think through a problem, says Schwalbach. “It doesn’t mean they’re not busy, but they have a little bit more breathing room where they’re not always chasing the tail.”

“This model and how we engage this amazing source of talent also benefits our clients, which then enhances the value proposition to them even further,” says Schwalbach. “There’s a great value to our clients in terms of getting from their first million to their 12th million.”

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From Tech CFO to Entrepreneur

Before starting AVL, Schwalbach was working as a tech CFO, but he and the CEO were at odds and had very different visions for the company. “I was shown the door and was running out of it at the same time,” he laughs. 

He began to put out feelers and have conversations with the people he had worked with. But in 2009, the recession was in full swing. There was not a lot of hiring going on. Because he had done a lot of work in tech, many of his contacts had strong connections to Silicon Valley, where fractional CFO shops were becoming popular. 

They urged him to consider consulting. 

The Fractional Approach

While he investigated the fractional concept, he also reflected on his role at his previous company. “I was employee number two at that firm. Initially, I was brought on to build the infrastructure and help find investors and raise capital, but I also helped define the product and identify the market.” 

The problem was that once the firm raised the capital they needed, there was a nine- to 12-month period where the actual CFO requirements for the business amounted to little more than eight hours a month. 

Schwalbach was updating the company forecast based on software development timelines, but that was about an hour’s worth of work. He was getting paid a hefty rate to run payroll and do basic accounting.

“I started to see how could have optimized this if I had been able to sell back to that company as a fractional CFO,” says Schwalbach

It was a pivotal moment for him. “It just became transparent to me all of a sudden that there was probably a better model for doing this.”

One-Stop Finance Shop

In his previous role, Schwalbach had also discovered that the best place for finding accountants to do things like payroll and accounts payable oddly enough was on sites like Craigslist. It seemed like an interesting pond to be searching for someone to be the guardian of cash and the closing of your company books, but there just wasn’t an alternative at the time. There was no multi-person professional service for accounting operations. 

One of Schwalbach’s first clients was a clinical research laboratory focused on conducting drug discovery projects for big pharmaceutical corporations. He helped the founder launch this business through an asset acquisition from a large pharma company that no longer wanted to run a drug discovery laboratory. Together, he and the founder put together a plan to purchase the assets, find employees, attract customers and raise capital. 

“I helped the founder transform from being an employee of a large company to an entrepreneur running a successful organization,” Schwalbach says.  

The experience was also an exciting start to Schwalbach’s own new business. They had the company up and running within six months and making a decent revenue. They also created 20 jobs in the front range within one year. Today the company continues to build on that initial velocity, doubling the size of its labs. 

Exciting Multi-Industry Dynamics

Schwalbach’s second client was a software company. It was an exciting time for him. “I was oscillating and doing high-tech selling B2B software with three-year contracts, then helping the company move to a SaaS model. The next day, I would go to a laboratory with white masks and white coats, and they’d be doing nephrectomies on rats.”

He thrived on the challenge, whether it was learning the science or pricing out a 30-rat nephrectomy study and figuring out how to scale the business. 

It was energizing, Schwalbach says. “It served my adult ADD well. I loved having to change gears, and the challenge was initially really cool.” 

From Challenge to Experience

Soon he had five clients and was working with entrepreneurs all over Denver — in the solar industry, with a health care product, the lab and two software companies. 

But as his client base continued to grow, that challenge morphed into something else – experience. “I had a broad pool of client experiences to draw on. I could say, ‘I see what you’re doing with your sales model. It’s like this client that I worked with.’ Or, ‘I see what you’re doing on the manufacturing side, which reminds me of this client.'”

This experience, he says, helps him be a better CFO and a better partner to the client. It continues to be an area of unique strength for AVL. A typical CFO working for a company might see only one or two deals per year, but AVL collectively typically closes over 25 financing deals a year, and that information is shared amongst the team. There are a lot of “reps”, a lot of lessons to be shared. 

AVL also expanded in other ways in that first year. With the laboratory business growing quickly, Schwalbach found himself once again doing payroll and accounting tasks. He offered to find a more affordable accountant for the CEO and was initially surprised when he was told, “Send me one bill for everything. I don’t want to pay another bill. Can you just manage it for me, please?” 

But it made sense. So, Schwalbach added his first employee – an experienced accountant who was looking for meaningful, challenging work, yet only had twenty hours per week available because she was caring for an elderly parent.

It was a great fit for everyone. However,  Schwalbach had other rapidly growing clients and he was going to need more accountants. “This was my original vision for AVL,” says Schwalbach. “Me, my five clients and five accountants working with me.”

An Integral Part of the Team

One of Schwalbach’s tech clients asked a simple question that caused him to rethink his entire plan. 

The first thing this CEO challenged him on was his use of the term ‘you.’ “You should say ‘we.’ You’re part of this team. Use ‘we,’ or it seems like you are not in it with us. I want you to be in it with us. I want it to be ‘we.’”

“It is where the idea of being a partner with our clients started,” says Schwalbach. “We changed our language and how we thought about working with our clients. We now talk about ‘we.’”

Related: “Riding Shotgun”: The AVL CFO as an Integral Part of the Team

The tech CEO also introduced Schwalbach to another CFO. This CFO didn’t particularly enjoy the operational aspects of being an entrepreneur like billing or marketing or finding clients. And most of her clients asked her to do the basic accounting work too. She’d be a perfect fit, the CEO proclaimed. 

There was one problem. Schwalbach already was the CFO. The CEO challenged him on that too. “Is there a reason you can’t have more CFOs than just you?”

An additional CFO meant the firm could handle more clients, and soon, there were three CFOs on board. By the end of its second year of business, AVL was a team of about 15. 

The AVL Model

In the beginning, the team was all independent contractors that AVL couldn’t train, develop or promote. However, we asked for feedback and learned that was precisely what these contractors wanted, AVL’s HR Manager, Amy Giggey, informed Schwalbach. They wanted to grow, develop, learn, and they wanted promotions. At the same time, securing individual healthcare was also becoming more of a challenge for contractors.

Giggey did the research and executed an employee model plan with health insurance and a development plan. It was a unique model that allowed the company to support its employees but still provide them with flexibility and the ability to work remotely. AVL accelerated to over 50 employees. 

In the AVL model, people are paid for the hours they bill. They set their targets, and some of their people want to work half the number of hours that their colleagues are willing to work. 

“And so, we are kind of the right size for the person in the phase of life that they’re in. They can consider what other challenges they have in their life or what they want to accomplish in their life. Many companies talk about work-life balance, but I think what we want to do is go well beyond offering balance. It allows our people to drive it.”

Related: Are You Getting These 5 Things From Your CFO?

The new approach has also allowed accountants to be promoted and for some controllers to be promoted to CFO status. “It’s rewarding to see people develop and figure out what it takes to get to the next level,” says Schwalbach. “I’m proud of that.” 

AVL has also expanded the variety of industries it services. They focused initially on tech because of Schwalbach’s experience in that area, but they’ve since brought on CFOs with expertise in food and beverage, CPG and service industries. 

And do their clients hire AVL staff away from the firm? 

“They try,” laughs Schwalbach.  

And that is probably the greatest testament to AVL’s success.