Funding for startups is on fire. But sometimes to get that funding, particularly after the seed round, startups need to have their financial house in order.
In the early stages, leaders are usually laser-focused on three key areas: developing their product or service, getting sales and generating cash flow. They can’t afford to invest in the wrong areas, including the wrong people and positions. Most don’t see hiring a CFO as a burning need yet, since an experienced CFO can command a big salary.
Fractional CFOs are the answer for a growing number of small companies. By bringing on a part-time CFO, a startup can get the benefits of having a veteran finance leader they likely couldn’t afford or even attract at such an early stage.
Typically, a business will bring on a fractional CFO for a limited time frame, often to help it mature its finance operations and secure its next round of funding. After that point, the company might hire an in-house CFO and accounting team.
Fractional CFOs are a short-term bridge, and they generally aren’t angling for a full-time job.
Now that so many companies have adjusted to working remotely, some are keeping fractional CFOs on longer. For example, one of our customers, Countsy, provides outsourced CFOs and entire accounting and HR departments for startups and growing companies in the technology and life-science industries. Its business is booming right now.
Whether a fractional CFO is hired for the short term or for an extended stay, companies are seeing that bringing in this expertise early on can truly change their trajectory.
Working with businesses in a variety of industries, I see those that bring in a fractional CFO benefit in three key ways:
1. Expertise and connections
It often makes sense for ambitious companies to look for outside expertise to get their finances in order while they focus on building products and ramping up sales. Most fractional CFOs have served as a company CFO in the past, and many have a background in private equity or venture capital and have steered startups to successful exits.
via https://AiUpNow.com November 19, 2021 at 01:39PM by Ram Iyer, Khareem Sudlow,
