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6 min read

5 Reasons Outsourced CFO Services Help You Raise Capital with Ease

You’re on the runway, ready for takeoff. Your engines are revving, your coordinates are set, and a voice from the control tower says, “You’re all clear.” Then you look over and the seat on your right-hand side is empty. Your co-pilot is nowhere to be found.

This is how many founders feel when they’re beginning to raise capital for a startup. In a word, they feel alone.

Fundraising is hard work. You have to research investors, build a data room and create a pitch deck and a financial model. Each of these is a major undertaking. And when you finish with those, you move on to months of endless emails, phone calls, and presentations.

Raising capital just isn’t a one-person job. But if you’re too early to have a full-time CFO, you might find yourself taking on most of these tasks yourself. This is where outsourced CFO services can be a lifesaver for many founders.

You get a reliable resource who knows how to create the resources and tools you need. A resource that has been here before and knows what investors are looking for. In short, you get a co-pilot for your fundraising journey.

In this post, we’ll look at 5 critical fundraising functions that outsourced CFO services can do for you.

Illustration: Outsourced CFO services superhero

Table of Contents

  1. Craft the Perfect Pitch Deck
  2. Negotiate Investment Terms Like a Pro
  3. Impress Investors with a Great Financial Model
  4. Crush Your Investor Relations
  5. KYN - Know Your Numbers (Inside and Out)

#1: Crafting the Perfect Pitch Deck

A compelling pitch deck is much more than just an array of visually-pleasing slides. It’s about telling your company’s story in a succinct, engaging way that leaves potential investors inspired and eager to become a part of your journey.

This is one area where outsourced CFO services can definitely help you shine.

An experienced finance leader brings expertise, insight, and keen business acumen to the table. They can leverage their experience to help you build a pitch deck that captures your company’s essence and translates it into a compelling narrative that hooks potential investors and leaves them wanting to learn more and get involved.

CFO services can help you develop and dial in every component of your pitch deck. Illustrating your revenue model, building financial projections, articulating your go-to-market strategy - these are all things a seasoned CFO can do for you, and do well. They’ll make sure you have the right data and visuals to clearly communicate your market opportunity and illustrate your potential for growth and profitability.

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With an experienced co-pilot on your team, you can make sure your pitch deck is not just informative, but persuasive. And going even one step further, they can help you dial in your presentation to ensure you instill confidence in investors and cast your opportunity in the best possible light.

#2: Negotiate Investment Terms Like a Pro

There are precious few people on earth who look forward to things like negotiating the financial details of an investment contract. Fortunately, those are precisely the people you’ll meet if you choose to get outsourced CFO services.

As you’ll learn working with one of these people, the negotiation process isn’t just about haggling over percentages and striking a deal. In the best cases, it’s about forming a mutually beneficial partnership that propels all parties forward. That’s your goal with negotiations: to form a partnership.

So, if you don’t feel confident going into this on your own, asking someone with experience to step in to help manage negotiations on your behalf can be a game-changer.

Even if you do feel confident about it, it’s still great to have a CFO as a guide, an interpreter, and an assistant. They can demystify the process and break complex financial data down into plain language.

So if a term comes up during a meeting that you don’t know, they step in and you don’t miss a beat. Liquidation preferences, anti-dilution provisions, vesting schedules, and cliffs - relax. You won’t miss a beat because you brought your finance guy to the meeting. It’s a good look.

You also get someone on your team who knows industry standards and benchmarks better than you. If any of the terms are unreasonable, they’ll catch it. If you want to try to improve terms, they can help you develop a strategy to hold your ground on key issues but strike compromises on others.

In negotiations, a CFO can help you negotiate like a pro to secure funding that protects your interests and aligns with your long-term vision.

Illustration: Financial model for raising capital

#3: Impress Investors with a Great Financial Model

A financial model is often a requirement for VC investors. Your model is no different than your pitch deck - you’re trying to impress people. You want a model that lets you identify, analyze, forecast, and report complex metrics accurately and in a way that supports your narrative.

Forecastr has a unique advantage here because building financial models is our core business. We build investor-grade financial models for every CFO Services customer. That financial model is the foundation for much of the work we do. You get a great software platform along with an expert who manages the model for you or with you, depending on what you want.

Whether you’re using Forecastr or some other tool, when you go to a pitch meeting, you want to show up with a rock-solid financial model.

A strong model lets you analyze different scenarios, calculate complex metrics, and segment costs and revenues to uncover detailed unit economics for every revenue stream and customer acquisition channel.

One of the most impactful things you can do in the fundraising process is to know these metrics, demonstrate that they are accurate and current, and show that you are actively analyzing them to look for opportunities to improve them.

With a dedicated CFO and a solid financial model, you can go beyond the traditional role of financial reporting and dive into your business operations at the deepest level. A CFO can harness the data in your model to identify actionable insights about growth opportunities, hidden risks, and your forecasted path to profitability and success.

Keep in mind, a financial model isn’t a “one-and-done” proposition. A financial model should be updated at least every month. With every update, the model becomes more accurate and better able to predict your future performance. Don’t show a model to investors if it includes outdated or inaccurate data - this is a big red flag for investors.

#4: Crush Your Investor Relations

Investors need to be kept in the loop. Before, during, and after your raise, effective investor relations require clear communication, transparency, and trust.

Outsourced CFO services can help you meet this requirement by presenting the right financial slides in board decks, delivering timely and accurate investor update emails, and responding to investor inquiries and issues in a timely manner. In many cases, an outsourced CFO can even be present during your board meetings to provide real time investor relations.

When investor relations are done well, they’re more than just presenting the right data. Just like when you’re pitching, investor relations should be used to continually tell the story of your startup - where it’s been, where it is now, and where it’s going.

Financial storytelling is an art. When you identify the right metrics, analyze their trends over time, and forecast them into the future, you can craft a numerical narrative that keeps your investors and stakeholders on the same page with you, working together toward the same goals.

During your raise, a CFO can build and maintain an investor pipeline template to help you identify prospects, track interactions, and rank them according to how well they fit your opportunity. They can also help build and maintain a comprehensive data room where investors can conveniently retrieve the financial records and documentation you’re sharing with them.

After you raise your capital, a CFO can help by keeping your financial model up-to-date and accurately reporting your actual performance and how it stacks up to your forecast. They can help you with any analysis and reporting that’s required for your investor update emails, your board meeting presentations, and one-off requests from individual investors.

Illustration: A founder who knows his numbers

#5: KYN - Know Your Numbers (Inside and Out)

We talked about this briefly above in the section about financial modeling. But this one is really about more than just having a financial model - it’s about having mastery of your model. Knowing the data in your model and where it comes from. Understanding the way your key metrics are calculated and how they’re trending over time. Knowing the assumptions that are used to create your forecasts, and understanding the logic behind them.

In the world of startups and SMBs, there’s a defining moment when an investor forms an opinion of you personally, and your capacity for effective leadership. Because investors view your business through the lens of financial performance, they will likely use your mastery of financial metrics as an important factor in forming this opinion.

When you’re talking to investors, you can’t be unaware of your metrics. You need to know your numbers inside and out. Be intimately familiar with your data sources, changes in your metrics over time, and the assumptions you’re using to predict your future performance.

While it’s up to you to be prepared and informed when you’re on the spot, outsourced CFO services give you the resources you need to provide well-prepared, accurate, and insightful answers about your financial performance.

Flying High with Outsourced CFO Services

The journey of a small business is rarely straightforward. There will be twists, turns, steep climbs, and rocky descents. But with an experienced and reliable CFO services provider by your side, you’ll be well-equipped for this exciting ride.

Because your fundraising is inextricably linked to your financial model, it makes sense to choose a service provider who can take ownership of your financial model. You want a resource that can build, optimize and analyze your model to extract the critical insights investors are looking for.

Forecastr’s CFO Services are a great fit for this requirement. Our comprehensive financial modeling platform gives you a state-of-the-art financial model. Our seasoned CFOs have years of experience building accurate and insightful assets for fundraising and investor relations.

We’re the copilot you need to make sure your fundraising journey goes as smoothly as possible. Reach out here to get started right away.

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