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3 min read

Do You Really Need To Hire a Fractional CFO Before Your Series A?

Real talk. The future is bleak for most startups. According to a recent Forbes study, approximately 90% of startups fail. That dismal number includes 75% of all venture-backed startups. So let’s ask the obvious question: Why?

As a founder, you already know that running a startup is extremely challenging. Sometimes it feels as if any minor oversight can cause the entire business to spiral into failure. But there is one critical oversight that causes the majority of startup failures. Cash.

Crippling cash problems cause the demise of more startups than any other issue. Sometimes it’s a lack of funding, and sometimes it’s just a failure to plan cash flow. Most startups fail to create a competent financial model and do not manage their budgets appropriately to sustain the business long enough to achieve scalable success.

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Enter the CFO. A Chief Financial Officer is responsible for managing the financial actions of a company – from managing cash flow to forecasting and analyzing financial opportunities and much more. A strong, professional CFO can optimize your spending and ensure that you don’t fall prone to the cash planning mistakes that end so many startups.

But many early-stage startups do not have a finance expert on their founding team and cannot afford a full-time hire right out of the gate. In this post, we’ll talk about the pros and cons of hiring a fractional CFO, and whether or not you need to hire one before you raise your Series A.

Infographic: Startup failure rate

Table of Contents

What Is a Fractional CFO?

A fractional CFO, or part-time CFO, provides a cost-effective solution to cash planning and financial management for startup founders without the commitment of a full-time hire.

If you don’t already have a CFO in place, we highly recommend you hire a fractional CFO before you begin to raise your Series A funding. We typically recommend that founders hire a fractional CFO sometime around their seed round, as soon as cash becomes available and cash planning becomes critical.

However, as a founder, you must not settle for just any fractional CFO. Take the time to understand the specific needs of your startup and identify a CFO candidate who fits the bill.

Following are three key factors you should evaluate before you hire a fractional CFO.

Factors To Consider When Hiring a Fractional CFO

Forecasting Experience

Does your candidate possess the adequate experience to determine your financial needs without constant support from you and your team?

If not, your CFO can become a bottleneck that slows your operation down instead of shepherding you to success.

Ask your candidate about the companies they have worked with in the past and discuss those companies’ financial models and forecasts. If possible, get examples of their work and make sure you would be satisfied if the financial model they share were developed for your startup.

Expense Management

Your CFO must demonstrate a high level of competency in understanding historical data and current expenses to build forecasts accurately.

This presents a significant challenge for many startups because historical data is typically minimal or non-existent.

Your fractional CFO needs to be able to prove that your accounting accurately reflects your actual business operations. Margins must reflect revenue and cost in tandem and expenses must be allocated to the correct department.

A compelling CFO candidate can quickly determine the revenue and costs of your business to expose your startup’s financial weaknesses and opportunities. Share some of your actual data with them, ask them to analyze it, and gauge their ability to make these judgments.


While the CEO is primarily responsible for raising your Series A, the CFO will be a key contributor. You’ll rely on them to aggregate and pinpoint favorable data that attracts investors and tells a story consistent with your fundraising narrative.

A substantial portion of fundraising operations lies in due diligence. To meet this demand your CFO must be able to efficiently sift through the entirety of your company’s historical financial data and also create accurate forecasts. During due diligence, investors will likely want to speak directly with your CFO to get a sense of their competency and better understand the finer details.

Ask your fractional CFO candidate what fundraising experience they have, what success they have experienced, and what they have taken away from their failures. Raising money is the truest test of a CFO’s forecasting and financial skills.

A good CFO candidate will be happy to share their fundraising experiences. A great CFO candidate can prove that they will get your startup prepared for due diligence well in advance of your Series A investor meetings.

Where To Find a Fractional CFO

For many founders, their network is the best place to find a fractional CFO. If you don’t find anyone through your network, there are several platforms you can use to locate strong candidates.

If you’re in between your seed and your Series A, regional CFO services firms like Venture First or Airstream Alpha are a great resource for highly-experienced financial professionals. There are also some international platforms like Pilot and AirCFO that provide CFO services online.

If you’re not quite ready to commit to these services, reach out to Forecastr to learn more about our financial support packages. We provide you with a simple and convenient financial modeling interface with a wide variety of support packages to suit any budget.

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