As a startup founder, you aren’t just building a product or service; you’re shaping an entire business ecosystem. One critical aspect that becomes paramount as your startup grows is financial management. Enter your Fractional CFO – a strategic partner who can guide your company through the complex financial landscape, helping to ensure stability and sustainable growth.
Hiring your Fractional CFO is a key strategic decision that comes with a number of important questions to consider. This article provides answers to eight top questions, along with links to related resources on Burkland’s blog, The Smarter Startup.
1. Why should my startup hire a Fractional CFO instead of a full-time CFO?
Answer: Hiring a Fractional CFO offers several advantages related to the unique needs of startups. First, it provides cost flexibility, giving you access to high-level financial expertise without a full-time salary commitment. Fractional CFOs typically work on a part-time or project basis, making it a cost-effective solution for startups. Additionally, they bring a wealth of experience gained from working with various companies, offering a diverse background and skill set that can be invaluable during different stages of your startup’s growth.
Related: New WSJ Article Underscores the Value of Fractional CFOs for Startups
“Using Burkland for financial guidance and tactical operations support allows us to focus on our customer offerings and growing our business.”
~ Adam DeVito, CEO, Monj
2. What specific roles and responsibilities will a Fractional CFO take on within my startup?
Answer: A Fractional CFO plays a pivotal role in your startup’s financial strategy. They are responsible for overseeing financial planning, forecasting, and analysis. Additionally, they can assist in fundraising efforts, M&A deals, managing investor relations, and helping to ensure compliance with financial regulations. Their expertise extends to risk management, cost optimization, and creating financial models that align with your business goals. Your Fractional CFO becomes a strategic partner to help guide your startup through financial complexities and help you make informed decisions.
Related: What to Look for When Hiring a Fractional CFO for Your Startup
“Our Burkland CFO developed a financial model that we used for planning and analysis. Our CFO also provided financial guidance and was instrumental during our acquisition. Burkland exceeded our expectations.”
~Feras Alhlou, Co-Founder, E-Nor
3. How do I determine the right time to bring in a Fractional CFO for my startup?
Answer: Most startups are ready for a fractional CFO somewhere between their Seed round and Series A, but the ideal timing can vary based on a startup’s specific needs and growth trajectory. Generally, as your business starts to secure funding, experiences rapid growth, or faces complex financial challenges, it becomes prudent to engage a Fractional CFO. Early involvement allows your CFO to contribute proactively to financial planning and laying a robust foundation for future scalability.
Related: Is My Startup Ready for a Fractional CFO?, A Self-Assessment to Determine if Your SaaS Startup is Ready for a CFO
“Burkland gave us the strategic finance we needed at key stages of scaling our company. One of the best decisions I made early on!”
~ Peter Reinhardt, CEO, Segment
4. Is industry expertise important when hiring a Fractional CFO?
Answer: Yes, industry experience matters. For example, SaaS startups have unique financial planning needs related to recurring subscription revenue and will be evaluated by investors based on different KPIs than other types of startups. Consumer startups need expertise and support in areas like inventory management, securing working capital, and measuring COGS. Healthcare startups demand CFOs with a strong understanding of the regulatory landscape, while Clean Energy startups are likely to require a CFO with a good understanding of grant funding and compliance.
Related: What to Look for in a Fractional CFO for a Healthcare Startup, Burkland Expands Services for Clean Energy Startups, The Top Four Finance Pain Points for Consumer Startups
“[Our Burkland CFO] Steve has deep insights about Web3 space which really gives me peace of mind as I run my day to day operations.”
~ Binici Kaya, CEO, RCM Labs
5. What is the cost associated with hiring a Fractional CFO? How does it compare to a full-time CFO?
Answer: The cost of a Fractional CFO is usually more affordable than hiring a full-time CFO. Fractional CFOs typically work on a contractual or part-time basis, deferring the need for a hefty salary and benefits package. This cost-effective approach makes financial expertise accessible to startups without straining their budgets, ensuring that financial resources can be strategically allocated to other critical areas of the business.
“The Burkland part-time CFO model works perfectly for our company. We have the resources we need when we need them at just the right level.”
~ Lisa Vann, CEO, MeetingPlay
6. How can a Fractional CFO contribute to fundraising efforts for my startup?
Answer: Fractional CFOs bring a wealth of experience in fundraising and investor relations. They can help create compelling financial narratives, prepare detailed financial models, and communicate financial performance and projections effectively to potential investors. Their strategic input can enhance your startup’s financial credibility, making it more attractive to investors and increasing the likelihood of a successful fundraising round at the best valuation.
Another equally important benefit is that a good Fractional CFO can help your startup target the best VC firms to approach for funding in the first place, and even the best partners within those firms. Remember, VCs aren’t just sources of capital; they’re also key strategic partners for your startup. Beyond providing financing, the right VCs can also provide guidance, expand your network, and add credibility to your company.
Related: What is a Startup CFO’s Role in Fundraising?
“Our Burkland CFO has been amazing. He helped us close a venture debt deal and convertible note. We look forward to his support in raising our next financing round.”
~ Luca Zambello, CEO, Jurny
7. Will a Fractional CFO be able to adapt to the unique culture and dynamics of my startup?
Answer: Yes, experienced Fractional CFOs are adept at integrating seamlessly into the culture and dynamics of startups. They understand the fast-paced and dynamic nature of entrepreneurial environments, and their flexibility allows them to align with your company’s vision and values. Effective communication and collaboration are key, and a skilled Fractional CFO will work closely with your team to understand the nuances of your startup’s culture while providing valuable financial leadership. Burkland Fractional CFOs take this a step further and integrate directly into our clients’ teams. For example, it’s common for our CFOs to attend board meetings with or on behalf of their clients, join their clients’ Slack channels, and even set up an email address under a client’s domain.
Related: Getting Maximum Value from Your Fractional CFO
“We can’t speak highly enough about Diego, our fractional CFO from Burkland. He rapidly got his head around our business, immediately identified areas to improve, fits well culturally, and brings both integrity and efficiency to the role. We’re extremely satisfied.”
~ James Chin Moody, CEO, Sendle
8. Can a Fractional CFO scale with my startup as it grows?
Answer: Absolutely. A good Fractional CFO is equipped to scale with your startup. As your business expands, they can adapt their level of involvement, taking on additional responsibilities and contributing strategic insights. This scalability is one of the key advantages of hiring a Fractional CFO, ensuring that you have the right level of financial expertise at every stage of your startup’s growth journey.
Related: Getting Maximum Value from Your Fractional CFO
“Burkland has been our trusted accounting and finance partner since our seed round. [Our Fractional CFO] immediately became a trusted partner and a valuable member of the team, I would recommend their services to any growing startup.”
~ John Milburn, CEO, Clear Skye
Hiring a Fractional CFO is a strategic move that can greatly benefit your startup, providing financial expertise, flexibility, and scalability to navigate the complexities of growing a venture-backed business. Learn more about Burkland’s Fractional CFO services, read more client reviews, and contact us to request more information.