Startup CXO

Chapter 124Fractional Chief Financial Officer

John McCarthy

The Need

Every company needs a Chief Financial Officer. Some companies need them two hours a week; others need them 60 hours a week. But every company needs somebody to help the CEO and the Board understand the finances, and they need somebody to make sure the financials are organized. You can call it a Chief Financial Officer or an acting CFO or Head of Finance, but that person is really needed at pretty much any company that has taken venture capital (VC) funding or has aspirations for taking VC funding.

Because once you've taken VC money, you probably need to tighten up your act. Some companies are very good at it—they're keeping good books, they track metrics and KPIs on a regular basis, and they close the books quite quickly. Others, not so much. It's important for founders and early‐stage startups to recognize that what's made you successful so far has been your product or your customer acquisition strategy, but it has probably not been your finances. And founders need to realize that the day is going to come when they'll need to have their finances in good shape. If you've been able to successfully raise your Series A without having your books in order, you pretty much got lucky, but you'll soon realize that won't be able to raise your Series B until you're able to quickly turn around financials to get through due diligence. You'll have to be able to answer the basic unit economics of your business.

If you don't ...