Fractional CFO Services for HealthTech & BioTech Startups

Why bring a chief financial officer (CFO) in-house when you can work with one on a part-time basis? That’s the concept of a fractional CFO, and it’s an ideal financial situation for startups, which are often limited by both money and resources. A fractional CFO can particularly be beneficial for HealthTech startups, especially when you consider the various regulations that must be met in this industry.

Read on for more information on the value of a fractional CFO and how they can benefit your HealthTech startup.

Understanding Fractional CFO Services

A fractional CFO has the same core responsibilities as any CFO, except your startup is only working with them on a part-time, as-needed basis. Fractional CFOs are experienced financial professionals who can help provide strategic financial leadership, create budgets and financial forecasting, manage cash flow and carry out other strategic planning and financial tasks.

However, the biggest benefit of a fractional CFO, especially for a young startup, is the cost savings that can be realized. Rather than hiring a full-time CFO and paying them an annual salary and benefits, you’re only paying for CFO services as you need them. The savings can be significant and you can scale up services as your startup grows. At Graphite Financial, our fractional CFO plans start at $1,250 per month.

The Importance of Industry-Specific Financial Expertise

The HealthTech and BioTech sectors are subject to stringent regulatory and compliance requirements, underscoring the importance of working with someone who is experienced in these fields. Experience matters beyond just running a business, but also managing its finances, specifically as it relates to financial planning during research and development cycles, managing investor funds and handling fundraising efforts, and ensuring private companies meet industry-specific financial standards.

Key Benefits of Hiring a Fractional CFO

Startups that work with fractional CFOs are privy to several benefits. These include:

• Significant cost savings compared to bringing in a full-time, in-house CFO.
• Access to high-level, industry-specific business intelligence and expertise to ensure your financial needs are met.
• Fractional CFO services are flexible and can grow and adapt as your HealthTech startup evolves.

How Fractional CFOs Drive Growth in HealthTech and BioTech Startups

Fractional CFOs can have a significant impact on the future growth of your HealthTech startup. For instance, one of the key duties of a fractional CFO is to optimize financial reporting and improve financial transparency, which can help leadership make better, more informed decisions.

A good fractional CFO will also work to prepare financial projections, assist with business development, and help manage investor relationships to ensure the startup is funded. Additionally, fractional CFOs can help with risk mitigation as it pertains to your startup. Fractional CFOs achieve this by analyzing the potential threats and developing financial management strategies to ensure stability throughout the lifecycle.

Selecting the Right Fractional CFO for Your Startup

Selecting the right fractional CFO for your HealthTech startup is similar to selecting any type of trusted partner — you want to identify the qualities that matter most to you and also consider cultural fit and various other intangibles. Remember, a good fractional CFO should act as a true extension of your startup. It’s a person you’re going to be working with a lot — and you want to be comfortable with your working relationship.

Some of the factors to assess when selecting a fractional CFO include:

• Experience and expertise: This is arguably the most important part of the partnership. You want to work with a fractional CFO who has experience and expertise — both in strategic financial planning and the specific HealthTech market.
• Cultural fit: Working with a fractional CFO who shares your core values can also help build a stronger relationship.
• Communication preferences: It’s important to be able to comfortably communicate with your fractional CFO partner. Find out how they prefer to communicate, how often they like to meet and the best way to get in contact with them in the event of an urgent matter.

Once you do some preliminary vetting, follow these steps:

1. Contact two to three financial firms that offer fractional CFO services.
2. Schedule in-person consultations to learn more about their services, level of experience, price points and market expertise.
3. Carefully weigh the pros and cons of each potential fractional CFO and make your decision.

Potential Challenges and How to Overcome Them

Hiring a fractional CFO is not without its potential for challenges. Here’s a look at some of the leading challenges that you should be on the lookout for:

• Integration challenges: Anytime you bring in an outside partner, there’s the potential for clashes with your existing workforce. The best way to avoid this potential difficulty is to set clear expectations with your staff and with your fractional CFO partner. Identify all goals, roles and the scope of the partnership in relation to your financial operations and then communicate this to all parties involved.
• Lapses in communication: Lapses in communication between your startup’s leadership and the fractional CFO is another common pain point associated with these types of partnerships. This is best defined in the early stages of your partnership when you identify the best ways to communicate.

Charting a Clear Path to Financial Success

From cost savings to having a direct line to high-level financial expertise, there are many benefits to working with a fractional CFO. A good fractional CFO partner can help your HealthTech startup chart its financial course, assist with fundraising and investor relations, and set financial goals for rapid growth that you can strive to achieve. Now’s the time to assess your startup’s financial needs and consider whether a fractional CFO can benefit you.

Partner with Graphite: Your CFO Solution Awaits

For more information on how a fractional CFO can help your HealthTech startup, contact Graphite today. Our team of experienced financial professionals has successfully partnered with hundreds of startups, and we’re standing by and ready to help you. Contact us today for more information and to schedule a free consultation.

FAQs

What is a fractional CFO, and how do they differ from a full-time CFO?

A fractional CFO has the same core responsibilities as any CFO, except they work a part-time, as-needed basis. Fractional CFOs are experienced financial professionals who can help provide strategic financial leadership, prepare financial statements, oversee cash flow management, collaborate with the management team to develop financial strategies, and offer business consulting—all at a fraction of the cost of hiring an in-house professional.

How can a fractional CFO benefit a HealthTech or BioTech startup?

Aside from providing significant cost savings versus bringing a full-time CFO in-house, a fractional CFO can also help HealthTech and BioTech startups navigate the multitude of regulations that must be met while optimizing cash flow and maximizing financial health.

What specific financial challenges do HealthTech and BioTech startups face that fractional CFOs can address?

Some of the biggest challenges that a HealthTech and BioTech startup faces involve regulatory compliance.

How do fractional CFO services help with fundraising and investor relations?

A fractional CFO can help with fundraising and investor relations as a byproduct of the high-level financial expertise they provide. For instance, they can carry out financial model development to attract investors and then assist with creating pitch decks for presentations.

Can a fractional CFO assist with regulatory compliance in the healthcare and biotech sectors?

Absolutely. In fact, that’s one of the biggest reasons why HealthTech startups should look to work with a fractional CFO. At Graphite, we pair our fractional CFOs with the startups in the industries that they’re most experienced in to offer the best, most well-rounded service possible.

How do I know if my startup needs a fractional CFO?

If your startup wants to save money and needs high-level financial expertise, chances are it could benefit from working with a fractional CFO. At Graphite, our fractional CFO plans start at just $1,250 per month and we pair our experts with startups specific to their market experience.

What are the costs associated with hiring a fractional CFO?

Fractional CFO plans start at $1,250 per month at Graphite — a fraction of what it would cost to hire a full-time CFO in-house.

How do fractional CFOs integrate with existing finance teams?

Good fractional CFOs are an extension of your existing financial team. If you have an existing finance team, a fractional CFO can help fill any gaps or even advise on certain financial practices to provide the highest level of service possible.

What are the first steps to engaging a fractional CFO for my startup?

Contact Graphite today and schedule a consultation to learn more about our fractional CFO services and how we can support your HealthTech startup.