Fractional CFO Bart Davis on the Two Hires Every Founder Gets Wrong Before an Exit

In the latest episode of The Building Texas Show, host Justin McKenzie sits down with Bart Davis, founder and CEO of Austin-based 512Financial, to discuss the critical financial hires that founders often get wrong before an exit. Recorded as Central Texas founders face tighter capital and growing compliance demands, the conversation offers practical advice on building the accounting, finance, and HR infrastructure that separates a clean exit from a broken one.

Davis, who ran fractional finance across Joel Trammell's portfolio from 2014 to 2021, argues that most startups wait too long to professionalize their back office. He shares Trammell's counterintuitive hiring order after raising significant capital: a controller and an HR leader before product or go-to-market hires. "Founders often ask for a CFO when they actually need a staff accountant at roughly 20 percent of the cost," Davis says, calling the mismatch "bringing a bazooka to a knife fight."

He recommends that healthy startups spend 2 to 4 percent of top-line revenue on accounting and finance functions. Davis also warns about the risks of misclassifying workers as 1099 contractors, a common issue he sees when onboarding new HR clients. On AI, he notes that his team uses it daily but has inherited Claude-built financial models "riddled with errors" that only a trained CFO would catch. His 80/20 rule: let humans drive the 20 percent of work that produces 80 percent of the value.

Davis is blunt about what he inherited when working with Trammell's portfolio companies Packet Design and iGrafx. "He had been using a different outsourced accounting firm and what he referred to as the output was random number generator financial statements," Davis tells McKenzie, warning that founders eyeing an exit cannot repair years of bad books on the way out the door. He points to Trammell's 2018 and 2021 exits as proof that early investment in the finance function directly shaped valuation, and challenges founders to confront "the things that make it real uncomfortable at night."

The episode also touches on the 2025 acquisitions of Austin PeopleWorks and HireBetter.com, and the 'monetizing churn' thesis behind them.