Why Series A Startups Should Hire Fractional CFO Services

Congratulations! Securing Series A funding is a huge milestone. It proves that your idea works, convincing investors to bet on you.

However, having more cash can lead to new challenges, especially for startups. At this stage, it's not about survival but the need to scale fast and smart. This is where most founders hit a concrete wall (figuratively!).

Momentum Growth Partners has extensive expertise and skills in helping startups grow sustainably by improving their operations and addressing the business challenges they face. From financial advisory to strategic planning and everything else in between, our business consulting experts are ready to lay the foundations for your success.

In this blog, we will answer some of the most pressing questions startups face following a successful Series A funding:



• What are the financial challenges Series A startups face?
• What is a fractional CFO?
• Do startups need a chief financial officer for expert financial guidance?
• How can fractional CFO services help startups grow?

Secured Series A Funding? Watch Out for These Problems!

While Series A funding can feel amazing, it can trick business owners into thinking that their money problems are over. However, the reality is much different.

Startups use the money they've raised to grow operations. That said, scaling fast comes with a new set of challenges. After Series A funding, business owners face several headaches, some of which include the following:

Cash Flow Management

With more capital available, you're more likely to take risks. Aggressive hiring, marketing campaigns, or operational expansion can make it incredibly challenging to manage cash flows. They can adversely impact forecasting and budgeting.

Human Resource Burden

With a fast-growing team, you need to allocate more money toward salaries, benefits, and other financial incentives. If you're not thinking strategically, human resource costs can spiral out of control. The management team may have to focus on efficient resource allocation instead.

Complex Operations

Whether you plan to target a new market or introduce a new product, you're going to incur new costs. With every expansion, it's crucial to budget accordingly and keep track of finances.

Further growth may lead to multi-layered financial operations. This may require specialized expertise, something that the startup may not have.

Greater Reporting Requirements

As you successfully close Series A funding, investors may want greater financial reporting. They want to know how much the business makes for them. This means moving away from simple spreadsheets and providing detailed financial statements, KPI tracking, and updates to show financial performance.

The Need for Strategic Planning

Startup business owners must focus on growing profitability following Series A funding. Every dollar needs a purpose, and great strategic financial leadership can help you achieve your financial goals. What do we mean by this?

Your startup may need to explore better financial systems. It needs to go beyond basic bookkeeping and focus on:

• Dynamic financial models with financial forecasting that project different scenarios
• Better software that can handle growth in your finance function
• Strong controls to prevent fraud and errors
• Deep financial analysis on your unit economics and financial health

What Are the Financial Challenges That Founders Face After Series A Funding?

Following successful Series A funding, most founders strive to create new products or improve sales. However, they fail to recognize the potential issues that may arise due to a lack of financial management. This can adversely impact their startup.

Here are some of the common problems entrepreneurs face after securing Series A funding:

• Increased burn rate: Your burn rate increases fast. Without good forecasting and better cash management, you can run out of capital sooner than expected. Every spending decision affects your survival and requires informed decision-making.
• Greater reporting requirements: You need monthly board packs, detailed KPIs, and clear financial reports. Poor financial statements can hurt future fundraising. A single bad board meeting can damage investor confidence and make it more difficult to raise capital.
• Lack of strategic financial planning: Simple budgets won't work. You need models that connect to your business planning strategy. What happens if you grow 50% faster? What if a key channel fails? These complex financial decisions require expert analysis and strategic insights before such situations arise.
• Compliance: With more capital comes greater regulatory attention. While compliances can vary from one industry to another, healthcare startups have strict rules they need to follow. One compliance mistake can cost you millions and damage your reputation.
• Lack of focus on unit economics: You need to understand your true customer acquisition cost and lifetime value. Business growth without profitable unit economics leads to disaster. Many startups learn this too late and struggle to improve profitability.
• Complicated scaling process: Hiring too fast can harm startups, while hiring too slow can negatively affect growth. Every new hire can have an impact on your burn rate, which is why your business needs careful planning.

Why a Full-Time CFO Isn't Always Right for Series A

Most founders quickly hire a full-time chief financial officer after successfully closing Series A funding. This strategy can often backfire, as startups face unique financial challenges that require smart, innovative solutions.

Here is why hiring a full-time CFO may not be the right option for your startup:

Huge Paycheck to Cover

Top CFOs cost $250,000 or more per year. This doesn't include benefits, bonuses, and equity. At the same time, hiring a chief financial officer means higher recruitment fees and overheads. All of this can eat into your profits at a time when cost optimization should be a priority.

Good CFOs Are Hard to Find

Experienced and knowledgeable financial experts prefer working with established businesses or large multinational companies. They enjoy the stability and perks that come with working for such corporations.

For a startup, finding a skilled and experienced chief financial officer can be like looking for a needle in a haystack. You'll end up wasting a lot of time searching for the right professional.

Another thing to note is that startup needs are different from those of traditional businesses. It requires a strategic and hands-on professional who understands the challenges and thrives in a fast-paced environment.

Your Startup May Not Need a Full-Time CFO

While Series A funding can complicate financial operations, a startup may not yet need a chief financial officer at this stage. You can hire a financial controller or an officer to handle day-to-day finances, allowing you to save money on CFO costs.

Should a Startup Hire a Fractional CFO? 

A fractional CFO is an experienced finance executive who works part-time. They bring high-level financial expertise without the full-time cost.

There are several benefits to hiring a fractional CFO, some of which include the following:

Greater Cost Savings

With a fractional CFO, you're getting top-tier financial expertise at a fraction of the cost. Most fractional CFOs cost 60% to 80% less than a full-time chief financial officer and provide services on either an hourly rate or a flat monthly fee basis.

Immediate Access to Financial Expertise

There is no learning curve with a fractional CFO. By working with startups and other businesses, they've already solved these problems multiple times before. They can start adding value from day one with strategic and actionable insights.

Better Strategic Focus

After Series A funding, your startup needs to focus on high-level planning, investor relations, and risk management. A fractional CFO can work on all of these while your internal team handles day-to-day operations.

An Eagle's-Eye View

With a unique culture, a startup molds professionals in a fast-paced environment. While this is a good thing, employees might become entrenched in the company's routines, resulting in financial and operational oversights.

A fractional CFO brings an external perspective, identifying market trends, issues, and opportunities that may go unnoticed internally. With financial expertise across multiple industries, they offer a valuable bird's-eye view to help guide strategic decisions.

Greater Scalability

Growing startups need flexibility. Things can change at a moment's notice, and you must adapt immediately.

Do you need more help managing finances? Are you looking for greater strategic support? Don't worry, as you can easily adjust the hours of a fractional CFO.

One thing to keep in mind is that some of these professionals may be working for multiple companies, so it's best to discuss the schedule prior to hiring.

What Do Fractional CFO Services Include? 

Hiring a fractional CFO can be the best option for your startup. They provide a wide range of services, including the following:



• Building financial models and forecasts
• Managing cash flow and optimizing runway
• Creating investor reports and board materials
• Tracking key metrics and KPIs for informed decisions
• Setting up risk management and compliance
• Preparing for future equity funding rounds
• Mentoring your existing finance team

For Series A startups, fractional CFO consulting typically offers better value. It provides strategic guidance at a fraction of the cost, helping set your business on the path to success while reducing costs.

When Should You Hire a Fractional CFO? 

Not sure if you're ready to hire a fractional CFO? Here are some signs you should be on the lookout for to help you decide whether your startup needs a business leader:



• You have Series A funding and plan aggressive business growth
• Your financial reports go beyond basic bookkeeping but lack sophistication
• Investor questions about projections are hard to answer
• Cash flow feels tight despite having funding
• You're unsure where to spend money for the best results
• You worry about compliance or financial risks
• You spend too much time on finance instead of your core business
• You're thinking about Series B or an exit
• Your finance team needs senior guidance
• You need help with future performance planning and sustainable growth strategies

Why Choose Momentum Growth Partners for Fractional CFO Services

At Momentum Growth Partners, we're not your average fractional CFO firm. Our strategic experts have real experience helping startups in a wide range of industries achieve sustainable growth.

We've helped many Series A startups navigate growth, secure additional funding, and build sustainable businesses. Unlike CPA firms that focus mainly on compliance, we offer fractional CFO services that integrate financial strategy with your overall business goals.

Momentum Growth Partners tailors fractional CFO services to your specific needs. Instead of adopting cookie-cutter solutions, our experts become part of your team, helping you make informed decisions and avoid costly mistakes. Our fractional CFO pricing reflects the value we deliver.

Whether you need a part-time CFO for ongoing support or interim CFO services for specific projects, Momentum Growth Partners has the specialized expertise you're looking for.

Don't Just Grow. Elevate Your Startup with Momentum Growth Partners!

Series A is a turning point for most startups. As the financial complexity grows, you need sophisticated leadership to navigate the challenges.

Hiring a fractional CFO isn't an expense. It's an investment in your business's financial health. You get expert guidance, better decision-making, and peace of mind. This lets you focus on what you do best: building your product and growing your business.

Ready to take control of your finances and accelerate your growth? Call us at (517) 730-1751 to discuss how our outsourced CFO services can help your startup achieve sustainable growth and reach its financial goals!