CEO and Founder of Kruze Consulting
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A SaaS startup should consider hiring a Part-Time CFO at least 3 months before a new fundraising round, unless you are already working with an experienced SaaS accounting firm. There’s a lot of preparation that goes into process, and a startup CFO will be essential as the CEO is often hair-on-fire busy courting potential investors. A CFO will build the financial model, track KPIs, prepare the financials, and will leverage angel/VC relationships. After the fundraising round, an interim CFO’s workload decreases dramatically. CFO level work then focuses on benchmarking the financials and KPIs to the financial model that was presented to the investors, and providing detailed reports of this progress at the quarterly board meetings. Intermittent startup CFO requests include advising on equity compensation, venture debt, investor relations, etc. Note that at Kruze, we provide outsourced, fractional CFO and accounting to SaaS companies, and we have helped hundreds of SaaS businesses raise rounds without a CFO or part-time CFO in place - it all depends on the quality of your SaaS accountants. And we think we are some of the best.
Part-Time CFOs work well for Seed, Series A-C Startups. Past Series D, a startup will usually hires a CFO to manage the now growing accounting department, but expect to pay $240K+. There aren’t really any KPIs that designate this. Rather, you’ll know its time to hire a full time CFO when your interaction with your part time CFO becomes consistent. Otherwise, you may end hiring a CFO who will be busy during the fundraise, but will then become an overpaid Controller for the next 2-3 years.
No, most of our clients who have only raised a Series A do not have a CFO or a VP of Finance. You can outsource most of the finance function until usually the Series B, or increasingly commonly, after the Series C. In fact, outsourced, recurring accounting has it’s own special “SaaSy” name - Finance as a Service. With Finance as a Service, you can get the recurring accounting and finance advice that you need, every month, on a recurring basis.
If you’re thinking about an IPO in the near future, you’ll need a full time CFO ASAP.
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