You don’t necessarily need a CFO before raising institutional capital, but having strong financial leadership significantly improves your chances of success. Many startups successfully raise Series A funding without a full-time CFO by using fractional CFO services or handling key financial preparations internally. The decision depends on your startup’s complexity, funding stage, and the quality of your existing financial systems.

What does a CFO actually do during the fundraising process?

A CFO handles the critical financial infrastructure that makes institutional fundraising possible. They build comprehensive financial models that project revenue, expenses, and growth scenarios investors expect to see. During due diligence, they prepare detailed financial documentation, ensure accounting systems meet institutional standards, and manage the data room that investors scrutinise.

Beyond number-crunching, CFOs translate your business strategy into financial language that resonates with institutional investors. They create the three-statement financial models (profit and loss, balance sheet, cash flow) that demonstrate how you’ll use investment capital to achieve specific milestones. When investors ask detailed questions about unit economics, burn rates, or cash runway, your CFO provides authoritative answers that build confidence.

The CFO also manages ongoing investor relations during the fundraising process. They coordinate with legal teams on term sheet negotiations, help structure deals that align with your growth plans, and ensure compliance with investor reporting requirements. This financial leadership expertise becomes particularly valuable when discussing valuation, equity structures, and the strategic use of raised capital.

At what stage do most startups hire their first CFO?

Most startups hire their first CFO between Series A and Series B rounds, typically when they reach £2-5 million in annual recurring revenue or employ 50-100 people. At this stage, financial complexity increases dramatically with multiple revenue streams, international operations, and sophisticated investor reporting requirements that exceed what founders can manage alongside their other responsibilities.

The decision often coincides with preparing for larger funding rounds where institutional investors expect professional financial management. Startups raising Series B and beyond face intense due diligence processes that require dedicated financial leadership. Your existing team may lack the specialised knowledge needed to handle complex financial modelling, investor presentations, and regulatory compliance.

However, timing varies significantly based on your industry and business model. Software companies with subscription models might delay CFO hiring until later stages, while hardware or biotech startups often need financial expertise earlier due to complex inventory management, regulatory requirements, or longer development cycles. The key indicator isn’t just revenue size but financial complexity that requires dedicated professional management.

What are the alternatives to hiring a full-time CFO before fundraising?

Fractional CFOs offer the most popular alternative, providing senior-level financial expertise without full-time costs. These experienced professionals work part-time with your startup, typically 10-20 hours per week, handling fundraising preparation, investor relations, and strategic financial planning. Costs range from £3,000-£8,000 monthly compared to £120,000+ annually for full-time CFO salaries.

Financial consultants specialising in startup fundraising provide another option. They focus specifically on preparing your financial documentation, building investor-ready models, and guiding you through due diligence processes. While less comprehensive than fractional CFOs, they’re often sufficient for well-organised startups with solid existing financial foundations.

Interim CFO solutions work well when you’re actively recruiting a permanent CFO but need immediate expertise for fundraising. These professionals bridge the gap, often staying 6-12 months while you complete your search. Some accounting firms also offer CFO-level services specifically designed for growing startups, combining bookkeeping, financial planning, and fundraising support in integrated packages.

How do investors view startups with and without CFOs?

Institutional investors generally view startups with experienced CFOs as more mature and investment-ready. A qualified CFO signals that your company has reached sufficient complexity to warrant professional financial management and suggests you’re serious about scaling systematically. This perception can accelerate due diligence processes and increase investor confidence in your financial projections.

However, many successful startups raise institutional capital without full-time CFOs, particularly at Series A stage. Investors understand that early-stage companies must balance financial expertise with other priorities. What matters more is demonstrating strong financial discipline, accurate reporting, and clear understanding of your unit economics and growth drivers.

The key difference lies in investor expectations during due diligence. Startups with CFOs typically face more detailed financial scrutiny but can handle complex questions confidently. Companies without CFOs need founders who can discuss financial metrics authoritatively and may benefit from fractional CFO support during investor meetings. Financial leadership maturity matters more than specific titles when building investor confidence.

What financial preparations can you handle without a CFO before raising capital?

You can manage several critical financial preparations independently with proper systems and knowledge. Start with clean, accurate bookkeeping using professional accounting software like Xero or QuickBooks. Ensure your financial statements are current, properly categorised, and reconciled monthly. This foundation enables you to build basic financial models and track key metrics investors expect to see.

Develop a comprehensive financial model showing three years of projections, including revenue forecasts, expense planning, and cash flow analysis. Many founders successfully create these using templates and online resources, though the quality may not match professional CFO work. Focus on clearly demonstrating your understanding of unit economics, customer acquisition costs, and lifetime value calculations.

Implement proper financial controls and reporting systems that institutional investors expect. This includes board reporting packages, monthly financial reviews, and documentation of your accounting processes. While you can handle these tasks initially, recognize when complexity exceeds your expertise. Startup financial strategy becomes increasingly sophisticated as you grow, eventually requiring dedicated professional management to maintain investor confidence and support continued scaling.

The decision about CFO timing ultimately depends on your startup’s specific circumstances, funding goals, and existing financial capabilities. Whether you hire full-time, engage fractional expertise, or handle preparations internally, the important thing is ensuring your financial leadership matches your growth ambitions and investor expectations. At Golden Egg Check, we help startups assess their financial readiness and connect with the right expertise for their funding journey.