How to Hire a Fractional CFO for Your Startup

Your startup just hit a critical inflection point. Maybe you're preparing for a Series A, dealing with increasingly complex financials, or realizing your bookkeeper can't answer the strategic questions your board is asking. You need a CFO—but a $250,000+ full-time hire doesn't fit your runway.

This is exactly where a fractional CFO makes sense. For $3,000-$10,000 per month, you get an experienced financial leader who's navigated the exact challenges you're facing—often across dozens of startups.

But startup CFO needs differ dramatically from established company needs. This guide focuses specifically on what to look for when hiring a fractional CFO for a venture-backed or growth-stage startup.

Why Startups Need a Different Kind of CFO

Corporate CFOs optimize established financial systems. Startup CFOs build financial infrastructure from scratch while simultaneously helping you not run out of money.

The skill sets are surprisingly different:

Corporate CFO Focus	Startup CFO Focus
Managing existing processes	Building processes from zero
Compliance and controls	Cash runway management
Quarterly earnings	Fundraising and investor relations
Large finance teams	Solo or minimal support
Stable revenue models	Rapidly changing business models

A CFO who spent 20 years at Fortune 500 companies may struggle with the ambiguity and resource constraints of startup life. Look for startup DNA.

When Your Startup Needs a Fractional CFO

The right time to bring in a fractional CFO varies by situation, but common triggers include:

You're Preparing for Fundraising

Investors expect sophisticated financial materials. A fractional CFO can build your data room, create compelling financial models, and help you answer tough questions during due diligence.

Your Bookkeeper Has Hit Their Ceiling

Basic bookkeeping services handle transactions. But when you need cash flow forecasting, scenario modeling, or board-level financial reporting, you've outgrown basic bookkeeping.

You Have a Board (or Will Soon)

Board members expect CFO-level financial reports and analysis. Monthly cash updates from a bookkeeper won't cut it.

Revenue Is Getting Complex

Multiple product lines, different pricing models, subscription revenue recognition, international customers—as complexity grows, you need strategic financial leadership.

You're Negotiating Major Deals

Enterprise contracts, acquisitions, strategic partnerships—these require financial expertise in due diligence and deal structuring.

You're Burning More Than $50K/Month

At this burn rate, detailed cash flow management becomes critical. A fractional CFO ensures you're tracking runway accurately and making smart allocation decisions.

What to Look for in a Startup Fractional CFO

1. Fundraising Experience (Critical)

If you're planning to raise capital, this is non-negotiable. Your fractional CFO should have:

Direct fundraising experience:

• Helped companies raise Seed, Series A, or later rounds
• Created investor-ready financial models and projections
• Built data rooms and managed due diligence processes
• Participated in investor meetings (not just prepared materials)

Questions to ask:

• "How many fundraising processes have you supported? What stages?"
• "Walk me through a recent data room you built."
• "What due diligence requests typically surprise founders?"
• "Have you negotiated term sheets? What did you focus on?"

Red flag: If they've only worked with bootstrapped companies or can't speak specifically to fundraising mechanics, they lack this critical skill.

2. Startup Stage Experience

Match their experience to your stage:

Pre-revenue to $1M ARR:

• Building basic financial infrastructure
• Setting up accounting systems properly (you don't want to fix this later)
• Creating first financial models and forecasts
• Managing limited runway carefully

$1M-$5M ARR:

• More sophisticated forecasting
• Unit economics analysis
• Headcount planning
• Series A preparation

$5M+ ARR:

• Scaling financial operations
• Revenue recognition complexity
• Building finance team
• Series B+ preparation

Someone who's only worked with Series C companies may overcomplicate things at your early stage. Someone who's only worked pre-revenue may lack the sophistication you need as you scale.

3. SaaS/Recurring Revenue Expertise (If Applicable)

If you're building a SaaS or subscription business, your CFO must understand:

• MRR/ARR calculation and growth analysis
• Cohort analysis and retention metrics
• CAC, LTV, and payback period calculations
• Revenue recognition (ASC 606)
• SaaS-specific benchmarks and investor expectations

Ask them to explain your key metrics and what "good" looks like for your stage. If they can't, they'll struggle to guide your financial strategy.

4. Board Reporting Capabilities

Startup boards need specific reporting that differs from corporate boards:

What startup boards want to see:

• Cash runway and burn rate trends
• Key SaaS/business metrics with benchmarks
• Cohort-level performance data
• Clear articulation of what's working and what's not
• Forward-looking scenarios, not just historical results

What to look for:

• Ask to see sample board decks they've created
• Look for clear data visualization and storytelling
• Ensure they can speak to investor concerns, not just accounting concerns

5. Systems and Process Mindset

Early-stage companies need CFOs who can build, not just manage. Evaluate their ability to:

• Select and implement accounting software (QBO, Xero, or more robust systems)
• Set up chart of accounts correctly (fixing this later is painful)
• Build financial models in spreadsheets that are maintainable
• Create reporting dashboards that scale
• Document processes so others can execute

6. Operator Mentality

Startup fractional CFOs often need to be hands-on, especially at earlier stages:

• Can they do the work themselves, or do they only direct others?
• Are they comfortable with ambiguity and incomplete data?
• Will they roll up their sleeves during crunch periods?
• Can they operate without a finance team supporting them?

The Interview Process for Startup CFOs

Phone Screen (30 minutes)

Focus on basic fit:

• Availability and capacity
• Startup experience (stages, outcomes)
• Relevant industry experience
• Fundraising background
• Current client load

Deep-Dive Interview (60-90 minutes)

Assess strategic and practical capabilities:

Fundraising Questions:

• Walk me through preparing a company for Series A. What's your playbook?
• What financial metrics do you focus on for investor presentations?
• How do you approach financial projections when the business is still evolving?

Technical Questions:

• How would you set up our chart of accounts? What mistakes do you see companies make?
• Walk me through how you'd calculate our CAC and LTV.
• How do you approach revenue recognition for our business model?

Scenario Questions:

• We have 8 months of runway and are starting a fundraise. What's your first priority?
• Our board is asking for better financial visibility. What would you build first?
• We're considering a pricing model change. How would you analyze this decision?

Reference Checks

For startup CFOs, focus references on:

Founders they've worked with:

• What was their role in your fundraising process?
• How did they handle board communications?
• Were they able to work with limited resources and ambiguity?
• Did they help you make better business decisions, or just report numbers?

Investors (if possible):

• How was the quality of financial materials during due diligence?
• Did the CFO add credibility to the company?
• How did they perform in investor meetings?

Paid Assessment

Consider paying for a focused project before committing to an ongoing engagement:

Options:

• Review your current financials and identify top 3-5 issues ($500-$1,500)
• Build a 12-month financial model based on your data ($2,000-$4,000)
• Prepare a mock board deck from your current numbers ($1,000-$2,000)

This reveals both their capabilities and working style.

Structuring the Engagement

Hours Per Month

Match engagement size to your needs:

Your Stage	Typical Hours/Month	Monthly Cost
Pre-seed, pre-revenue	5-10 hours	$1,500-$3,000
Seed stage, $0-$1M ARR	10-20 hours	$3,000-$6,000
Series A prep/post	20-40 hours	$6,000-$12,000
Active fundraising	40-60 hours	$12,000-$18,000

Note: Hours often increase temporarily during fundraising or major financial projects.

Scope Definition

Be specific about what's included:

Typical ongoing responsibilities:

• Monthly financial close and reporting
• Cash flow management and forecasting
• Board reporting and attendance
• Budgeting and financial planning
• Investor relations support
• Financial model maintenance

Project-based additions:

• Fundraising support (often priced separately)
• System implementations
• Due diligence for M&A
• Pricing strategy projects

What to Include in Your Agreement

• Specific deliverables and responsibilities
• Hours per month and overflow policy
• Response time expectations
• Confidentiality provisions
• Equity considerations (common for early-stage startups)
• Term length and termination provisions

Red Flags Specific to Startup CFO Hiring

They've Never Worked with Investors

If you're venture-backed or planning to raise, investor fluency is essential. Someone who's only worked with bootstrapped companies won't know investor expectations.

They Overcomplicate Everything

Startup finance should be as simple as possible while still being accurate. If their sample work is overly complex, they'll slow you down.

They Want to Build a Team Immediately

At early stages, you need a CFO who can execute, not one who immediately wants to hire a finance team.

They Can't Explain Your Metrics

If a CFO candidate can't clearly explain SaaS metrics (or your industry's key metrics) and what "good" looks like, they'll struggle to guide you.

They're Inflexible on Hours

Startup needs fluctuate. A CFO who demands rigid time commitments may not adapt well to startup life.

Onboarding Your Startup Fractional CFO

Before They Start

Provide access to:

• Accounting software (QuickBooks, Xero, etc.)
• Bank and credit card accounts (view access)
• Cap table (Carta, Pulley, or spreadsheet)
• Investor updates and board materials
• Financial models and projections
• Sales/revenue data (CRM, billing system)

Share context on:

• Company history and current situation
• Key challenges and goals
• Board composition and expectations
• Timeline for fundraising or other major milestones

First 30 Days

Week 1-2 priorities:

• Complete financial assessment
• Identify immediate issues or risks
• Understand current reporting and gaps
• Meet key stakeholders (board, leadership)

Week 3-4 priorities:

• Address any urgent issues
• Begin building improved reporting
• Create initial forecasts if they don't exist
• Establish regular communication cadence

Measuring Success

Track whether your fractional CFO is adding value:

Short-term indicators (30-90 days):

• Improved clarity on cash position and runway
• Better monthly reporting
• Identified and addressed financial risks
• Clear understanding of unit economics

Medium-term indicators (3-6 months):

• Board confidence in financial reporting
• Fundraising materials ready (if applicable)
• Financial systems running smoothly
• Data-driven decision-making improving

Long-term indicators (6+ months):

• Successful fundraise with CFO support
• Scalable financial infrastructure in place
• Strategic insights driving business decisions
• Finance function ready for next stage

Frequently Asked Questions

Should I give my fractional CFO equity?

It's common at early stages, especially for more significant time commitments. Typical ranges are 0.1%-0.5% for fractional roles, usually vesting over 2-4 years. This aligns incentives and can reduce cash costs.

Can a fractional CFO help us raise money?

Yes—this is one of their most valuable contributions. They can build your data room, create financial models, prepare you for due diligence questions, and even participate in investor meetings.

What's the difference between a fractional CFO and a finance consultant?

A fractional CFO acts as a true member of your leadership team, attending board meetings and taking ownership of the finance function. A consultant typically advises but doesn't own outcomes.

When should we transition to a full-time CFO?

Consider a full-time CFO when: you've raised Series B or later, you need 30+ hours/week of CFO time, or you're approaching IPO or acquisition scenarios where full-time leadership is expected.

How involved should our fractional CFO be in fundraising?

Very involved. They should own the data room, build projections, prep you for financial questions, and ideally attend key investor meetings. Budget for increased hours during fundraising.

Find Your Startup's Fractional CFO

The right fractional CFO can be the difference between a successful fundraise and a failed one, between accurate runway projections and a cash crisis, between confident board meetings and uncomfortable ones.

Take the time to find someone with genuine startup experience who understands the unique challenges of building a company from scratch.

Ready to find a startup-experienced fractional CFO? FractionalChiefs connects startups with vetted fractional CFOs who have real fundraising and startup experience. Browse our CFO network or tell us about your startup and we'll match you with CFOs who fit your stage and needs.