Ep 304: Kingsley Afemikhe - Embedding Finance in the Heart of Innovation
Welcome to Count Me In. I'm your host, Adam Larson. Today, I'm excited to sit down with Kingsley Afemikhe, CFO at Shield AI, for an inspiring look at financial leadership in the world of defense tech and artificial intelligence. Kingsley brings a unique perspective having moved from chemical engineering studies straight into financial roles at investment banks and rapidly growing startups. In our conversation, he shares how his engineering mindset helps him break down complex financial problems, drive data driven decisions, and maintain agility as Shield AI scales.
Adam Larson:We discuss the distinctive challenges of navigating government contracts, building collaborative and curious finance teams, and the role of technology plays in boosting productivity. Whether you're interested in finance tech, innovation, or organized growth, this episode offers practical insights and real world advice. Let's jump right in. Kingsley, I'm so excited to have you on the podcast today, and you have a very fascinating background with chemical engineering and then moving into finance. And I was just wondering if we could start off just a little bit by telling your story and just saying, how has that diverse experience shaped the way you kind of approach financial leadership today?
Kingsley Afemikhe:Yeah, absolutely. Thank you so much for having me on the show, and I'm really looking forward to our conversation today. So a little bit about my background. I have a master's in chemical engineering and management, and then I never worked as an engineer. I only ever worked in finance.
Kingsley Afemikhe:So I worked in investment banking, doing fundraising, advisory, M and A, and then went off and I worked for a number of fast growing engineering heavy startups, or as I like to call them emerging growth companies as the SEC calls it. And what's been really fantastic about that experience is being able to take what I call the engineering problem solving framework. And what that is is a, starting off with first principles thinking. No matter how complex the question or the challenge is, there's always a fundamental principle that you're trying to tackle. If you're willing to put the effort and time and then b, have a very data focused, data driven approach, you can solve almost every problem.
Kingsley Afemikhe:And so what that means if you think about it in an engineering context yourself often with a theory. Behind the theory, you want to go do a few experiments. You look at the literature to assess whether your thinking is correct. And you have the courage to step away from your original thesis if it doesn't quite pan out. And that's exactly what we do in finance all the time.
Kingsley Afemikhe:And we have core principles in accounting. We have core ideas behind these principles. There is a body of literature out there. And now with the rise of LLMs and the rise of other data sources, we're able to really, really dig in and think about these complex challenges. And then you go and you test it and you get advice.
Kingsley Afemikhe:And then you iterated it and you solved the problem. I find that engineering focused mindset has helped me think that any hill or mountain can be conquered with structure behind it.
Adam Larson:When I like that that that mindset of it's still all the same, it's still accounting at its base level. Matter what industry you're in, you still have to apply those base principles. And if you're not applying those, then you're not having good accounting practices. So no matter what industry you're in. So I like that approach that you're giving it.
Kingsley Afemikhe:Yeah, yeah, absolutely. And even things like you may hear from my accent that I didn't spend my childhood in The US. And so, it made me a bit of a personal comment about me, both my parents are chartered accountants and my two older brothers are chartered accountants. And so I really grew up in that world of basically IFRS accounting, but really just the principles of how to think about assets, how to think about capital, how to think about returns. And when I had the great fortune to come to The US, I found it really quite exciting actually to learn more about US GAAP and learn more about the principles behind US GAAP, which are the same as the principles IFRS, but also the historical context that drive the differences that we see.
Adam Larson:Definitely. So, you know, at your current organization, Shield AI, you know, you guys operate at the intersection of finance, technology and kind of national security. Are there different challenges that are brought up when you're kind of navigating that as your team, and and how do you navigate them?
Kingsley Afemikhe:So I'll start by telling you something about Shield AI. Shield AI's mission is to protect serving men and women with intelligent systems. What that means for us is artificial intelligence and artificial intelligence enabled hardware, specifically Group three drones, which we make here called the VBATs. And what is exciting about working in the defense industry is the support that we have gotten over the years from our customer. And what that means is there is a willingness because of the focus on the mission to take certain risks and allow and enable us to develop our core technology.
Kingsley Afemikhe:There's also a willingness to support those risks by giving us research and development dollars. So in our early stage of our development, entities such as the DIU and all the DoD entities were really supportive of us getting our risk. In addition, we have a customer that has allies. We have allies all over the the the world. And we can you know, when we invest in sales and marketing in The US, it also pays off internationally.
Kingsley Afemikhe:The challenges from an accounting perspective is, as a taxpayer, I care very much about this. Every dollar that the US government spends is a dollar that's been contributed by you and I. So there is real responsibility for DoD entities to be very thoughtful about where the money is spent, are they being compliant with their goals, and have we done what we said we were going to do. And so the process, the go to market contracting process takes longer. Very often we have post delivery audits that we have to perform.
Kingsley Afemikhe:We have reviews. We have national security controls that we have to have. And so even if we're not a public company, but very, very often we have some of those controls that are akin to what you would see in a public company. In addition, as we expand abroad, we have to be really, really thoughtful about data stream information. We have to be really thoughtful about which allies and and what could happen without artificial intelligence technology if we fell into the wrong hands.
Kingsley Afemikhe:And then we have to obviously work very closely with, yeah, the UST entities to make sure that we're further in the interest of our host country.
Adam Larson:So talking about expanding, I I know a lot of folks is I I I've I've spoken to many different, you know, smaller businesses and as they're expanding, it's hard to kind of maintain agility as you grow. You know, are there different strategies that have worked best for you and your organization as you're you know, if you're as you're expanding and there's there's more input coming in, you got to make sure that you have still have those right internal controls and the right agility as you grow as an organization.
Kingsley Afemikhe:Yeah, absolutely. So the analogy I use with my team is the, if you've ever been to Hong Kong, you've got this scaffolding of buildings that are made of bamboo. You think it's extraordinary how you can build a spacecraft of bamboo, but bamboo is actually pretty strong and very flexible. We are that line that is pretty strong and supports the business but remains very flexible. And how we do it is we embed finance further up the chain and as deep as possible.
Kingsley Afemikhe:And I'm going to give you two specific examples of how we do it. First of all, technical accounting. Very often in many companies, you'll have the BD team goes off and, you know, gets the legal team involved to get a contract together. And at the end, someone pops over a contract over to technical accounting. And then they're scrambling to think, what does this mean for rev rec?
Kingsley Afemikhe:What does this mean for like, what are the risks? And so on. And that was something I really, really wanted to change. I wanted the BD reps of the Inc. Of Tech and Accounting as their partners at the very beginning.
Kingsley Afemikhe:So often with our customers when we're just at the at the term sheet stage, even before the final contract, even before the initial drops, my tech and accounting team is there in the room giving guidance. And that is great because we flag any potential problems upfront. We know about them. We can often discuss them with our auditors. Shout out to BWC, they're fantastic.
Kingsley Afemikhe:B, we can work very closely with the team around things like managing risks or payment schedules or revenue recognition. So that way, when the contract is done, you know, it's not news to us. We've been in the room. We've been at the table. We've done that place there.
Kingsley Afemikhe:Secondly, you know, we have two divisions in our company. We have a Hivemind AI division, and we have our aircraft kind of our VBAT manufacturing and sales division. Very different challenges. In the former, we have things like software revenue recognition. We have things like, you know, where is the contract obligation and so on.
Kingsley Afemikhe:How do you do that? And then secondly, on the aircraft, we have, as you would expect, inventory, working capital, and a range of other issues when we're thinking about cost of goods sold and allocation of costs. And so what we've done is embed our financings in both areas. And so I have a financing pipeline that's thinking through pricing, that's thinking through government regulations, just thinking through all the software dynamics. I have a very operational aircraft team that sits in Dallas that is working through the inventory counts, working through managing our fleet of VBAs which we have on our balance sheet.
Kingsley Afemikhe:That is the only way that you can be flexible if you're in the room and on, you know, at the table.
Adam Larson:What strategies would you give to somebody who is saying, hey, I wanna make sure that my team I'm embedding my team just as you described it, like, oh, I wanna do that too. But they're they're not necessarily getting the agreement from, you know, those around them as well.
Kingsley Afemikhe:Yeah. That's great. It's a really, really good question. So you earn your place at the table. You don't demand your place at the table.
Kingsley Afemikhe:Often, finance is seen as remote or almost a bit like an internal version of your external auditors. Three things have to happen. First of all, the role of finance is to be evangelical about controls and why we're we bring the controls in. And that is not condescending to people, but just explaining the journey that we're in and explaining the benefits. B, you have to bring gifts.
Kingsley Afemikhe:Our teammates have great challenges that they're trying to solve every day. We're all really focused on the mission. And if you find ways to make their jobs easier, faster, more accurate, people will open doors for you. So I say to the team, you have to kind of bring gifts to our counterparty so they see you as a, I mean, not physical gifts, that would be that would be
Adam Larson:Bring cookies to the different meetings.
Kingsley Afemikhe:Correct. Exactly. Yeah. And finally, you have to show up. And, you know, there's a long debate about remote work and non remote work.
Kingsley Afemikhe:And I know that a ton of finance teammates, including some of my very beloved teammates are remote, and that really, really works for that. But we were in a manufacturing engineering company. The technicians who build our VBATs can't build the VBATs from home, they turn up. And so if you're in the office and understanding their challenges and you're able to sit with them person to person, you often get a lot more by it. And so what that means if you are remote, know, you organize, symposiums where you can come in, you show up in the office and build those relationships as well.
Adam Larson:Yeah. It's not just staying in your silo and saying I'm just gonna get my stuff done, which causes the surprises that you're avoiding by having your team in there early.
Kingsley Afemikhe:Yeah. Yeah. And just one thing I just you really remind me of something. It's just what I find with finance people is a very strong focus. I need to solve this problem.
Adam Larson:Mhmm.
Kingsley Afemikhe:I need to get through this close. I need to get through this audit. And that shows a lack of empathy and curiosity for our teammates. Engineers, manufacturing people love to explain they're doing. They also have their own goals.
Kingsley Afemikhe:And if you have a thirty minute conversation, and you're able to get what you need in twenty minutes, why don't you spend ten minutes listening to the counterparty, understanding what they're going through, learning a little bit about what they're doing? I assure you, you'll enjoy it.
Adam Larson:Oh, I love that advice. So when you you as an organization, you're operating in, like, the defense sector and even the commercial sectors, how do your financial strategies diff different? Are there challenges that come up when you're, when you're managing both of those models?
Kingsley Afemikhe:Yeah, yeah, absolutely. I'll just talk a little bit about what we're doing. We started up in the aerospace and defense industry, and we're now expanding our AI hybrid efforts, are more commercial motion, originally starting with defense companies, but in a commercial transaction. So in terms of financial strategies, like I mentioned, the go to market cycle in the defense industry is long. And so very often you have an initial RFP, which is often very formal, they'll have certain requirements, you have to put in a proposal.
Kingsley Afemikhe:You go through that original proposal and very often there's a demonstration where you'll go and demonstrate the capabilities and show it first of all technically and often demonstrated in the field. And there are very strict ways that they want to be fair and see that you are indeed the best solution. And sometimes there's what's called a protest ability to when you win other counterparties who did not win in the process and protest and say that it wasn't quite fair and because, you know, governments have to be fair, you win on the other end and then, you know, you could win the contracts. And I have to say our government customers are all amazing and fantastic. They don't always pay exactly on time with what's in the contract, but we have never ever had to write off any receivable from our government contractors.
Kingsley Afemikhe:So we've got the best, best customers, but they're just gonna maybe sometimes take a little bit longer. That's a really long cycle. Yeah. And so we have to be really thoughtful about how we allocate costs as well to that cycle because obviously probability of wind changes as you go through that cycle. We have to be really, really thoughtful about financing.
Kingsley Afemikhe:We have a great debt financing partner, QH Capital, that supports us as we kind of tie up inventory maybe slightly longer than we would want to. And we then have to be really, really thoughtful about our government customers and how we land and expand and grow from a return on capital employed perspective. In the commercial motion, it's a less defined process, a shorter process, but it often has a lot more upfront sales and marketing expense. The cost to acquire is greater. Particularly as you're kind of working through with the particular customer, often the touch points are less defined.
Kingsley Afemikhe:Right? So because you don't have such a strict process, you have to think about who has access to the c suites, who has access at a manager level and how can you showcase your capabilities all the way through. And our commercial motion is much more of a software motion. And so we're working in a really thoughtful way about how we grow in that. We announced last week the addition of a really fantastic CEO, Gary Steele, who's rejoining us in mid May.
Kingsley Afemikhe:And, you know, his entire bread and butter is building commercial software businesses. He was previously CEO of Proofpoint and also CEO of Splunk, which is taking a little while Cisco.
Adam Larson:What is so this might not be relevant, but when you're saying that that long process that the government contracts take, you know, how does that change when you're looking at something like revenue recognition? With that long process, the revenue recognition changes as well.
Kingsley Afemikhe:Yeah. So it depends on the nature of the revenue and nature of the contract. We do deliveries of EBATs, but we also have recognized revenue over time as a percentage of completion where we use an EAC methodology as well. And that's where again what I said at the start about having contracts really there at the beginning and being really thoughtful with your partner about what are the obligations over time and how do you assess at any given point how you're doing against the obligations you have overall? One of the other net effects of that is that we're a company that that keeps time.
Kingsley Afemikhe:Right? And so we have to be really thoughtful on a daily basis about how much time our engineers and teammates such as myself are allocating particular particular contracts because that drives revenue. That tells you, as you know, in in EACs, where am I relative to the actual goal? How far is it gonna take me to get to the goal and the obligation and the contract? How much revenue can I recognize?
Kingsley Afemikhe:That's an area where when we do the audits with PWC, when we close the books, that is really the bulk of the parts where we drill down in a lot of detail to make sure that we are really, really on point on that as well.
Adam Larson:Yeah. So when you and I spoke before, you had mentioned that, you know, you're big into, you know, helping allocate and attract capital for your organization. Are there any lessons you can share that you've learned that from securing that funding and managing investor relations within your within your high growth? Because it is a very high growth environment where you're working.
Kingsley Afemikhe:Yeah. No. Absolutely. There are three things I would say. The first is understand the tailwinds and headwinds in your industry and really be able to speak very clearly about them.
Kingsley Afemikhe:Right? So in our industry, we're at Surely I, we're an AI company. We work in the defense industry. We've been doing it for ten years. We're fortunate that, as I say in The UK, your buses come at the same time, right?
Kingsley Afemikhe:But we've been doing AI and we've been doing defense tech for ten years. And so there are tailwinds like increased expenditure for defense, for our allies in Europe, the increased focus in The US on AI and machine learning on mass. So intelligence affordable mass, attritable platforms. But there are also headwinds, such as things change geopolitically, how is The US company seen in Europe, which is another growing market? And as you say, the kind of working capital, how much capital do you need to build up the minimum scale to work in this space?
Kingsley Afemikhe:And what we what we do very honestly and openly is talk about the strengths and the challenges because then your investors can calibrate. The second thing is to be really clear as to what your core technology is and to tell the story of the journey and where you've been going and why you've been doing it. So what does that mean for us is trust. We've been doing AI in the defense industry for ten years. We fly, f sixteens and fighter jets autonomously all the time now.
Kingsley Afemikhe:We flew the past, secretary of the air force autonomously as well. But eight years ago, no one would have taken that seriously because we hadn't developed technology sufficiently and we didn't have the trust. And so what we did was we started off in the quadcopter markets and much smaller drones, cheaper and you know, flew Hivemind which is our AI stack on that. We then climbed the aviation food chain to the VBAT which is our group through UAS and then also did that again to the fighter jets. And so we're able to tell the story about developments and where it was a few years ago.
Kingsley Afemikhe:And then more importantly, tell the story of how with each investment and each round we've made, we've accelerated our core technology. And then finally, we are still cash flow negative, EBITDA negative. I can tell you that's something I think about every day and we're getting there and being EBITDA positive, we're growing quite quickly. So I take very seriously is that every cent we spend is a cent that's being provided to us by people who believe in our mission and believe in our team. And so it behooves us to be very crisp on what exactly will we achieve with this fundraise?
Kingsley Afemikhe:When will we achieve it? And most importantly, how will you, investor or board, know if we're on track or not? And so give you the confidence for the next time that we fundraise. And so if you talk about your industry and the headwinds and tailwinds, talk about why you are well placed to win in that industry with your core technology and are very clear about what you want to achieve, we find it's, you know, pretty compelling narrative for investors.
Adam Larson:Well, and having the person who is in charge of the finance, you know, telling that story, I'm sure is even more is even more comforting for the investor as they're listening, saying, hey, you know what you're talking about because you're the one in the weeds with your team doing that.
Kingsley Afemikhe:Yeah. Yeah. Absolutely. It's it's a partnership approach.
Adam Larson:Mhmm.
Kingsley Afemikhe:It goes back to what I said about about curiosity. You know, I one of the benefits I have is I'm not an engineer, but I have an engineering degree. So I can, with a straight face, say some engineering concepts, but we have phenomenal engineers in our company. Yeah. Brandon Ryan started the company, Alma Harris and and Nate Mike Nate Michael, really fantastic.
Kingsley Afemikhe:And I learn from them every day. And so when I'm with investors, I can take it. This this is my understanding based on my discussion with the engineering team. I'd be delighted to bring them in the room. And that really resonates with people being kind of very open and honest about what you're aware of and where your partners in talent could help you with some explanation.
Adam Larson:So, you know, with with the great story you've been telling about your team and, you know, how growth the organization is happening, You know, I just have to ask, you know, what do you look for in talent when you're when you're looking for add more people to your finance and accounting team? What do you look for in talent? You know, how do you structure your team for long term success? You know, because when you're in a fast growth environment, I'm sure it's very fast paced and constantly moving, but, you know, you have your people in place and you trust them.
Kingsley Afemikhe:Yeah. Yeah. I shout out to my team. They are the best team I worked with in my career. I'm really honored to work for them.
Kingsley Afemikhe:I really mean that. I work I work for them, and and I'm really proud of them. The way I structure the team is we have a core accounting team, we have a finance team and we have what we call a continuous improvement team which is really our team that manages our systems and our ERP. With the accounting team, something that's really important to me is to bring a team of all talents really. I have people in my team who works in private equity finance, who works in large defense companies, who works in startups.
Kingsley Afemikhe:And really they're able to tackle challenges which day to day seem new, but very often have occurred in the past if you're willing and able to do the work. And so what that means is putting in the controls we need but not too much. What that means is coming back every day with first principle thinking to the problems that we have today and that our team does a really really good job of that. Secondly, with the finance team, we have a range of really excellent people who have worked with larger companies, mid sized companies, and have scaled. And with that team, what I'm looking for there is a strong punch approach.
Kingsley Afemikhe:I want the individual division heads to think of them almost as a as a mini CFOs. And it's we're not perfect yet, but we're getting there. And really, when when our head of aircraft has his his right and left hand men and women, he has my my next person next to him as well helping him make very, very good decisions. And in my continuous improvement team, just a a comfort with data and a comfort with flexibility in what we're doing as a as a company that's growing very quickly, still private, but has ambitions to potentially go go public. Underpinning everything that I look for in in teammates is empathy, curiosity.
Kingsley Afemikhe:That is so critical. Yeah. Because it's with curiosity that you gain empathy and then you gain trust. And really an excitement to put in the effort. What we're doing is not easy.
Kingsley Afemikhe:It requires from time to time extra effort. And the prize is clearly the mission that we are very focused on and obviously, you know, remunerate our team early, but also the prize is is growth, and that comes in with a curiosity as well.
Adam Larson:Yeah. You have to be curious to kinda be engaged in the mission even if you're not an engineer and you don't understand what the organization is doing. You want to be passionate about what you're doing so you can help out the organization as a whole. And that's not something that you can always teach. That's something that's kind of innate in some people.
Kingsley Afemikhe:Yeah. Look, the one I say to people is that there's no such thing as a good or a bad accountant or a finance person. It's just like the right fit, right? Yeah. You know, like a marriage sometimes, you know, brought wonderful people but you're not meant to be together.
Kingsley Afemikhe:And so in interviews, I tell people I think you're fantastic but maybe this is not the firm for you. If you don't have a drive, if you don't care at all about our mission in any way, if you're not willing to be curious and deal with change, then you may be happier somewhere else and that's fine. Those are the kind of traits that we look at here at Chiliad.
Adam Larson:So what role has technology played within your finance team? How has you helped use technology to complete the mission that you're on?
Kingsley Afemikhe:Yeah. So the message I told my team a year ago is that we are going to 10x revenue having a zero net increase in the size of the team. That is an extraordinary challenge terms of productivity. I'm saying that we are going to 10x our productivity more or less. And the only way we will do that is with the right processes, with the right systems, and with the right people.
Kingsley Afemikhe:We've already spoken about people, so I'll set that aside. And when I look at our processes, there are a range of things that we can automate. There are a range of things we can simplify. The first step is to just ask why do we do things? Again, best principles.
Kingsley Afemikhe:Why do we do things this way? And so we're balancing using LLMs to look at our journal entries and look at how we can think about our adjustments. We are using AI to think about where the risk areas are that require more reviews. The whole teams are using our Amazon, the way we tackle challenges in terms of our reporting and net P and A. And quite often as well, we're building data sheets and so that, you know, with our reporting now, very often it's I'm person in finance.
Kingsley Afemikhe:I have this information that gives me an output in Excel, then I go and sit down with someone in the business and explain to them how it's done. And what we're doing is trying to disintermediate ourselves. Mhmm. And so produce dashboards and information flows that are robust and are accurate. And so that the individual in the driving seat in the front office has access to the data and can make decisions faster with support of finance as opposed to us almost like being there the instance to see it's assessor between the two.
Kingsley Afemikhe:And that takes time and that takes effort. Yeah. And we're thinking through all of these steps as well. What's great though is that people in the team are reacting really, really well to that because the net effects of that is that some of the more drudgery based tasks, some of them lower value tasks, the tasks that we'll be able to accurately move on to the technology that we can do. And then people can spend their days doing really thoughtful things like talking to the BD reps about particular contracts and thinking about rev rec and and being really thoughtful about timing of particular payments or, like, managing the risk that we have with our FX in different countries.
Kingsley Afemikhe:That's fun stuff. Right? And so that that's that's the stuff that we we really, really want the team to focus on.
Adam Larson:Have you have you seen an impact be have you I mean, you are a AI driven company. Have you been able to use AI within your finance team to kinda help some of those processes as well?
Kingsley Afemikhe:Yeah. And we see yes. Absolutely. And I think that that's one of the things that we will see a lot more of that. Yeah.
Kingsley Afemikhe:There's still I I think with any technology because we live this with our customers, I'm gonna get back to the word trust. Right? And so parts of it is just you start with something smaller, particular like lower risk item. You know, a lot of the accounting team are not keen to deploy AI because we know we're really under the gun to close the books accurately and quickly. But there are many products as we go along that we can use AI to accelerate our suite and we can use a particular skills and also technology that we we have some of our service providers that we use fluocast, for example, for checklists and we do the close.
Kingsley Afemikhe:And so we'll be implementing more systems over the next twelve to eighteen months. Like I say, we are gonna be keeping the team the same size as revenues grow, and we will achieve that. So
Adam Larson:Well, that's gonna be quite a testament to see it done, I welcome that, and I encourage it. And, Kingsley, I just wanna thank you so much for coming on the podcast. It's been really great getting to know you and just hearing about what your team's doing, and it's been great.
Kingsley Afemikhe:Yeah. Absolutely. The last thing I'll say is I am passionate and excited for finance. And anyone who's in this industry, please stick with it. This is a great industry to be in, and we are making an impact every day.
Kingsley Afemikhe:So thank you so much for having me.
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