Strategic CFO Services for Growth-Stage Startups

If your startup is entering a critical growth stage, then you already know the stakes are high. Complicating matters even more is the increasing complexity of your startup’s financial situation. Don’t let your financial management become a weakness for your startup as you enter critical growth periods. Consider working with a qualified partner to ensure your financial management and overall financial and operational strategy become a strength. Graphite Financial is here to help.

The Growth-Stage Financial Inflection Point: Why It Matters

A startup’s growth stage is a period during which it focuses on scaling operations after finding product-market fit and a consistent customer base. This tends to occur after early seed funding but before Series B fundraising.

Finances tend to get more complicated due to increased revenue and expenses, marketing needs and having to navigate various other challenges that can impact overall finances, such as burn rate, proper cash flow management, and strategic planning and forecasting.

Some common challenges that startups have to navigate during the growth stage include:

• Hiring more personnel
• Optimizing resource allocation
• Scaling financial operations
• Incorporating more advanced technology
• Maintaining financial stability

From Tactical to Strategic: The Evolving Role of Finance in Growth-Stage Startups

The financial needs of early-stage startups are far less advanced compared to startups in the growth stage. While early-stage startups are mostly concerned with basic bookkeeping, growing startups must make the transition from accurate record-keeping to strategic decision-making.

Financial insights do more than just enable startup leadership to make smarter, more informed decisions; they can also help position your startup for fundraising rounds.

6 Critical Financial Functions for Growing Startups

From strategic financial planning and analysis to managing investor relations, the following six critical financial functions for growing startups work together as part of an integrated system. When they function as they should, they have a direct correlation to growth outcomes.

Strategic Financial Planning & Analysis

Good strategic financial planning and risk management can lead to smarter decisions and help chart a course to meet your startup’s objectives. Financial planning can also consider various scenarios, such as likely outcomes for best-case scenarios and worst-case scenarios, as well as the most likely outcome.

Capital Structure Optimization & Fundraising Strategy

Structuring capital for growth is another critical financial function for growing startups. The growing startup has the ideal mix of equity and debt financing (or hybrid financing) — and the capital structure should be flexible enough so it can be easily adjusted as needs change. It’s also important to understand the specific needs and growth stages at various phases of your startup, which can help influence fundraising rounds.

Unit Economics & Growth Metrics Refinement

Unit economics is looking at your economic metrics in the context of each unit sold. Some of the key metrics you’ll want to pay attention to include customer acquisition costs, margins, payback periods and lifetime value. These metrics help identify inefficiencies, optimize the allocation of financial resources and enable leaders to make better, smarter decisions to improve overall financial stability and performance. Comparing your unit economics to industry benchmarks can also provide valuable insights into how your startup stacks up and where there’s room for improvement.

Cash Flow Management & Runway Extension

Cash management is important during growth stages because it helps ensure your startup has enough liquidity to meet obligations, take advantage of opportunities and remain financially stable. Maintaining your company’s financial health during this period is essential to avoid disruptions and keep scaling efficiently. Some of the best ways to manage cash flow during growth include proactive budgeting, optimizing receivables and payables, managing inventory and taking advantage of technology to work smarter.

If you’re looking to extend your cash runway without slowing growth, some of the best strategies to do this include:

• Increasing prices
• Marketing to higher-paying consumers
• Managing churn more effectively
• Streamlining operations to reduce overhead

Financial Systems & Scalable Infrastructure Development

Scalable financial systems are important to ensuring that your startup can handle expansion and disruption. Building scalable processes and controls is best done by enacting the various strategies:

• Streamlining operations
• Leveraging technology
• Establishing robust internal controls
• Improving efficiency

Board & Investor Relations Management

Finally, growth likely isn’t possible without investors — and it’s important to be transparent with them to build trust, foster positive relationships and achieve business goals. This is best done by communicating effectively and consistently, and by intentionally addressing and managing the interests that are most important to your stakeholders.

The Strategic CFO Mindset: Beyond the Numbers

The role of a strategic chief financial officer (CFO) goes beyond the traditional duties of a CFO and acts in a key advisory role to help shape a startup’s long-term strategy and direction. Strategic CFOs help facilitate cross-functional collaboration between finance and a startup’s other departments to forecast and budget, allocate capital and measure performance. They offer strategic financial advice and insights that can help support sustainable growth across all departments of a startup, from product to marketing to sales.

When to Bring in a Strategic Fractional CFO: Key Indicators

When’s the right time to bring in a strategic fractional CFO? Here’s a look at some of the situations where it makes sense:

• If your startup is in a period of rapid growth
• If your finances have become increasingly complex
• If you’re looking to prepare a robust investment portfolio
• If your startup has a lack of strategic direction

The Graphite Approach: Strategic Financial Partnership for Growth

Graphite is well-positioned to serve as your startup’s strategic financial partner. Graphite professionals are experienced experts in all things finance, and we pair your startup with a team that has experience in the specific market you’re operating in. Whether you’re hiring a financial partner for the first time or coming over from another partner, we make things easy and convenient. We’ll assign your startup an onboarding partner to ensure a smooth transition.

At Graphite, we also strive to serve as your long-term financial partner, assisting your startup through its various growth stages and developing growth strategies that add value at every step.

Case Study: How Strategic Financial Leadership Transformed Vital.io

HealthTech startup Vital.io was formed in 2019, and it didn’t take long for it to rapidly grow. It soon became overwhelmed internally with its finances, and it turned to Graphite for strategic financial leadership and support. Graphite worked to tailor a solution that addressed Vital.io‘s unique needs, bringing a mix of financial expertise, operational efficiency and strategic insight.

“The Graphite team really feels like a part of our own team,” says Kelsey Powell, Vital.io Senior Director of Operations. “They provide strategic insights, unmatched responsiveness, and the level of service we’d expect from an in-house finance team, all while remaining cost-effective.”

Selecting the Right Strategic Financial Partner: Beyond the Basics

Selecting the right strategic financial partner is similar to selecting any other partner — you want to weigh professional expertise as well as the intangibles. Some of the key considerations you should be weighing include:

• Effective communication practices
• Weighing the firm’s experience in your startup’s industry
• Success stories and customer referrals
• Collaboration preferences
• Assessing cultural fit

Start Your Growth Phase with Strategic Financial Leadership

A strategic fractional CFO can help manage growth phases and take your startup to new, more profitable heights. If your startup is entering a growth stage, contact Graphite today for a free consultation and financial assessment to learn more about how we can help. We specialize in startup CFO services for startups that need expert financial strategy without the full-time cost. Contact us today for more information and to get started.

Frequently Asked Questions About Strategic Fractional CFO Services

How does a strategic fractional CFO differ from a traditional financial consultant?

The role of a strategic CFO goes beyond the traditional duties of a consultant and acts as a key strategic advisor to help shape a startup’s long-term strategy and direction. Strategic CFOs also help facilitate cross-functional collaboration between finance and a startup’s other departments to forecast and budget, allocate capital and measure financial performance.

What is the typical cost structure for fractional CFO services at the growth stage?

Graphite’s fractional CFO services start at $1,250 per month and scale up from there based on a startup’s needs. Typically, startups in the growth stage require some strategic expertise, which is likely a step up from the base package.

How quickly can a strategic CFO impact our financial trajectory?

Good strategic CFOs can have an impact quickly, usually within a few months, to facilitate some improvements. The most significant improvements, however, take time and may not happen for several months or years.

Should we bring in a fractional CFO before or during a fundraising round?

We suggest seeking outsourced CFO services before a fundraising round. This helps allow for more thorough preparation, including a financial model, ensuring financial data is accurate, and assistance in preparing investor presentations.

How does a fractional CFO work with our existing finance team?

Fractional CFOs work collaboratively with existing in-house financial teams. They typically provide strategic financial guidance and support, but don’t take over the day-to-day responsibilities.

What specific deliverables can we expect from a strategic financial partnership?

Financial reporting, financial forecasting and budgeting, assessing financial risks, allocating capital and measuring performance are all key duties involved in a strategic financial partnership.

How do we measure the ROI of a fractional CFO engagement?

There are a few ways to measure ROI. One is the cost savings of partnering with a fractional CFO versus hiring one in-house. The other way to measure ROI is based on the impact in key areas of your startup, like managing cash flow, revenue growth and profitability.

When should we transition from a fractional to a full-time CFO?

Every startup is different, but generally, the best time to do this is when you need more consistent and deeper financial leadership. It’s also important not to make this jump until your startup can adequately support the investment into such a profession.