# Three Explanations for the Growth of the Fractional CFO Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-04-20 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: How Fractional CFOs Can Accelerate Startup Growth and Meta Description: Discover the benefits of hiring a fractional CFO for your startup, from creating a strong financial model to setting up for long-term growth and development. URL: https://financedigest.com/three-explanations-for-the-growth-of-the-fractional-cfohtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/img0489-1845-1736815861414-compressed.jpg) _By_ **_Dave Rosenberg,_** _Head of Marketing, EMEA, Oracle NetSuite_ New [startups are emerging at a rapid](https://www.financedigest.com/how-outsourcing-can-facilitate-rapid-growth-for-startups-and-smes.html "How outsourcing can facilitate rapid growth for startups and SMEs") pace. In the UK alone, almost 100 startups were being founded every hour in the first quarter of 2021, with big ideas being turned into commercial ventures. The race is on for funding, but with competition hotter than ever before, VC firms can afford to be selective. To secure funding, especially in the post-seed round, startups [must make their investor](https://www.financedigest.com/brexit-why-investors-must-now-think-global-to-maximise-and-protect-wealth.html "BREXIT: WHY INVESTORS MUST NOW ‘THINK GLOBAL’ TO MAXIMISE AND PROTECT WEALTH") approaches count, and that means getting their financial house in full working order. Understandably, not every founder is a [financial whizz but taking the plunge to hire an experienced CFO](https://www.financedigest.com/cfos-need-a-focus-on-forex-in-financial-planning-tools-accountagility-reveals.html "CFOs need a focus on forex in financial planning tools, Accountagility reveals") can still be an investment that is hard to justify. However, [times are changing](https://www.financedigest.com/a-time-of-change-how-artificial-intelligence-is-transforming-insurance.html "A time of change – how artificial intelligence is transforming insurance"). A new opportunity is opening for startups as we see the rise of the fractional CFO — a part-time financial expert that [manages finances](https://www.financedigest.com/how-parents-can-help-students-manage-their-finances.html "How Parents Can Help Students Manage their Finances") for multiple companies, providing expertise few [startups](https://www.financedigest.com/exploring-funding-methods-for-startups-a-deep-dive-with-the-merchant-marketplace.html) could afford or attract at an early stage full-time. Ambitious startups are choosing fractional CFOs when targeting particular milestones, like funding rounds, or [recruiting them for a limited period to clean up their financial](https://www.financedigest.com/2016-financial-recruitment-trends.html "2016 FINANCIAL RECRUITMENT TRENDS") operations, while others see their contribution as pivotal for a next phase of development. So, what [benefits can fractional CFOs](https://www.financedigest.com/the-benefits-of-big-data-how-to-convince-your-cfo.html "THE BENEFITS OF BIG DATA – HOW TO CONVINCE YOUR CFO") bring to startups to accelerate their growth and funding journeys? 1. **Creating a Strong** [**Financial Model**](https://www.netsuite.com/portal/resource/articles/financial-management/financial-modeling.shtml) Many ambitious founders don’t always grasp the fundamentals or importance of a strong financial [model to run their business](https://www.financedigest.com/cfos-its-time-to-own-the-business-model.html "CFOs: It’s time to own the business model"). Full of energy and enthusiasm, many prefer to focus on building sales and developing their product, rather than spending time wrapping their [head around profit and loss](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down"), growth plans, marketing expenses, and customer churn. Getting your financial house in order is a critical first step for any [startup with success](https://www.financedigest.com/how-to-turn-a-uk-startup-into-a-global-success.html "How to turn a UK startup into a global success ") in their sights — and that means bringing in the experts. A [fractional](https://www.financedigest.com/fractional-property-isnt-quite-as-safe-as-houses.html) CFO may help enable superior planning, fundraising, and allocation of finances, [bringing board-level insights](https://www.financedigest.com/incoming-starbucks-boss-to-bring-consumer-insight-to-coffee-culture.html "Incoming Starbucks boss to bring consumer insight to coffee culture") without the full associated cost and board seat that can come hand-in-hand with a full-time CFO. The majority of fractional CFOs will boast a [wealth of experience having served as a company](https://www.financedigest.com/poor-user-experience-plaguing-wealth-management-firms-warns-radical-company.html "Poor user experience plaguing wealth management firms, warns Radical Company") CFO in the past, with many having backgrounds in venture capital and private equity, bringing valuable insights from their knowledge working across multiple organisations. 2. [Setting Up for Long-Term Growth](https://www.financedigest.com/title-n95-mask-market-future-is-set-for-massive-growth-with-high-revenue.html "N95 Mask Market Future is Set for Massive Growth with High Revenue") The experience and knowledge of a fractional CFO can also be exactly what is [needed to take a step back](https://www.financedigest.com/if-the-nation-backs-fintech-we-need-to-address-a-few-things.html "If the nation backs FinTech, we need to address a few things") and rethink existing strategies — particularly when entering a new phase of growth or development. For example, at pre-revenue stage, the freemium [approach is often used to attract customers](https://www.financedigest.com/as-banks-become-more-digital-customer-satisfaction-calls-for-a-robust-approach.html "As banks become more digital, customer satisfaction calls for a robust approach"). But when your product or service is demonstrating value to customers, a fractional CFO may advocate a new product line or [subscription model](https://www.financedigest.com/the-rise-of-the-subscription-model.html "The rise of the subscription model") to promote continued growth. Being emotionally [invested in your own company](https://www.financedigest.com/invest-in-cryptocurrencies-commodities-or-companies.html "Invest in cryptocurrencies, commodities or companies?") can make it difficult to make the best decisions. Work with a fractional CFO for an objective perspective. Be open to embracing their insight and advice, [whether it’s revamping pricing](https://www.financedigest.com/graphic-chip-price-drop-raises-questions-on-whether-end-of-shortage-is-in-sight.html "Graphic chip price drop raises questions on whether end of shortage is in sight"), presenting your total addressable market, or preparing forecasts and models on how to scale. 3. **Building Credibility with Investors** To grow, [attract quality investment](https://www.financedigest.com/uk-becoming-less-attractive-for-investment-manufacturers-warn-2.html "UK becoming less attractive for investment, manufacturers warn"), and expand globally, startups need to balance financial leadership and infrastructure. Enthusiastic founders often [push ahead](https://www.financedigest.com/kosovo-pushes-ahead-with-car-licensing-rule-resisted-by-serbs.html "Kosovo pushes ahead with car licensing rule resisted by Serbs") and assume their finances can be tackled with a lone bookkeeper, yet fast initial progress can be short-lived. For long-term success and [sustainable growth](https://www.financedigest.com/which-kpis-should-a-budding-business-focus-on-for-sustained-growth.html "Which KPIs should a budding business focus on for sustained growth?"), startups need a true accounting function, with systems that provide the level of reporting that allows investors to truly understand the state of the business. Simple accounting systems won’t necessarily [meet investor expectations](https://www.financedigest.com/institutions-need-to-consider-spreadsheet-management-to-meet-the-pras-latest-stress-testingexpectations.html "Institutions Need to Consider Spreadsheet Management to Meet the PRA’s Latest Stress Testing Expectations") — and, trust me, they will be looking for the details: Is equity properly accounted for? How is deferred revenue handled? What is the cost of sales, marketing, and R&D? An increasing number of startups are finding value in the [role of a fractional CFO](https://www.financedigest.com/10-ways-automation-has-changed-the-role-of-the-cfo.html "10 ways automation has changed the role of the CFO") in helping them choose and rollout the right accounting system. They are also benefiting from both the expertise they can deliver instantly and the [fractional CFO’s ability to set up the company’s financial house](https://www.financedigest.com/fractional-property-isnt-quite-as-safe-as-houses.html "Fractional property isn’t quite as safe as houses!") for future growth. **An Exploding** [Fractional Market](https://www.financedigest.com/the-butter-fat-fraction-market-to-grow-beyond-the-odds-of-mediocrity.html "The Butter Fat Fraction Market To Grow Beyond The Odds Of Mediocrity") While the fractional CFO has yet to become commonplace, [demand is rising](https://www.financedigest.com/oil-rises-on-prospect-of-opec-supply-cut-demand-growth.html "Oil rises on prospect of OPEC supply cut, demand growth") rapidly. In a time when opportunities are high, but [markets are turbulent](https://www.financedigest.com/the-breakfast-cereals-market-to-sail-through-innovation-based-turbulence.html "The Breakfast Cereals Market To Sail Through Innovation-Based Turbulence"), investors are looking for transparency, reassurance, and returns. With no sign that the startup bubble is set to burst, a fractional CFO can be a strategic [move for those startups with ambitious plans — integrating the experience of a financial expert at a pivotal time](https://www.financedigest.com/30-years-of-excel-lence-time-to-move-on.html "30 YEARS OF EXCEL-LENCE: TIME TO MOVE ON?") for maximum impact. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---