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Does series A startup need CFO?

Vanessa Kruze, CPA, is a leading expert in startup taxes and tax compliance. Her team at Kruze Consulting has filed thousands of tax returns for companies that have raised billions in VC funding, and her work has been diligenced by leading VCs, attorneys, and M&A teams at the largest technology companies.
Vanessa Kruze, a highly-experienced CPA, brings valuable tax expertise to startups, drawing from her rich background at Deloitte Tax and as a financial controller for a $20 million startup. As the leader of Kruze Consulting, recognized multiple times in the Inc 5000 list, she specializes in navigating the complex tax landscape for startups. Her firm is known for delivering precise and strategic tax solutions, delivering tax credits utilizing advanced tools to ensure compliance and optimize tax benefits for startups throughout the United States.

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A Series A Startup doesn’t really need a CFO… but I have seen exceptions. I had an LA Series A ($10M raise) startup where I was 6 months into the engagement as the fractional CFO, it was clear that hiring a full time CFO was the right thing to do. We still consult on other accounting & finance tasks.

When early-stage startups need to think about hiring CFOs

In general, if you’re a seed stage startup gunning for a Series A you should consider hiring a Part-Time CFO at least 3 months before a new fundraising round. There’s a lot of preparation that goes into process, and an outsourced CFO service 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.

A lighter-weight alternative for Series A companies is to hire outsourced FP&A support instead of a Part-Time startup CFO. FP&A = Financial Planning and Analysis; these professionals can offer help putting together a financial model, creating charts and analysis that show your customer retention or burn rate, and other, less intensive work that prepares you for your next fund raise. 

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.

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