6 Ways a Fractional CFO Can Secure Funding For Your Business

The right time to raise funds isn’t when your coffers are empty, and you’re scrambling to keep the lights on. The best time to consider raising capital is when you have a clear vision of your next big milestone and a solid understanding of how much money you’ll need to get there. 

A fractional CFO can be the gateway to a successful fundraising round. They can help tell a compelling financial story, identify the right investors, and negotiate the best terms. So, don’t wait for a financial crisis to start fundraising. Instead, learn these 6 ways a fractional CFO can secure funding for your business, and then get started finding the right fit for your company. 

Your future self will thank you for hiring a fractional CFO to lead the way through this sometimes confusing and stressful process. Let’s get right into the many ways a fractional CFO can secure funding for your business. 

#1: Tell a Compelling Financial Narrative to Investors

A fractional CFO can help you identify the sweet spot for when to raise funds, and they can prepare your financial narrative based on your goals. Raising capital is no walk in the park. It’s a complex, time-consuming process that can easily overwhelm even the most seasoned founders and CEOs. A fractional CFO can be your secret weapon to secure the funding you need. 

How do they tell a compelling financial narrative? Let’s look at the steps. 

1. They set the stage with context—where your business has been, its goals, and its current status. A fractional CFO will use a combination of financial reports, KPIs, and other data that resonates with investors. 
2. They use visualizations to drive home the narrative. Investors want the cold, hard facts and a reason to believe your business can succeed. 
3. Finally, your fractional CFO knows how to pose and answer the right questions. With their expert knowledge and presentation of your business, key stakeholders will have a deeper understanding of your business and what it can achieve. 

A fractional CFO can weave your raw financial data into a story highlighting your organization’s journey, challenges, and successes. 

#2: Determine Your Capital Needs 

Investors need the right financial narrative and numbers to show that you’re a good business to invest in. If you don’t show a potential growth trajectory that will make them money in the end, they won’t invest. Likewise, you don’t want to take every bit of money investors throw at you because you’ll have to pay back that portion down the line. 

A fractional CFO can deep dive into your financials to understand what you have, what you need, and where you want to get to. Before asking for money, you need to know how much you need and why. 

Different sources of capital come with different strings attached, and you want to make the best financial decisions based on the outcomes you’re trying to achieve with your business. 

Some of the different capital options are: 

1. Angel investors. Typically, early-stage funding with relatively smaller amounts invested. 
2. Venture capitalists. These people are looking for unicorns and can offer more money but at a cost and expectation. 
3. Crowdfunding or bootstrapped companies are another option, depending on your consumer base, community, and team’s capabilities.
4. Traditional loans. These are potentially more risky if you don’t manage them well. 

Your fractional CFO will help you weigh the pros and cons of each. They typically have extensive networks of contacts and can help negotiate the best terms, which leads to number three. 

#3: Negotiate The Best Terms

Once you’ve found an investor who believes in your vision and company, you have to negotiate the terms of the investment. Your fractional CFO can help you determine a fair valuation so you don’t sell yourself short or scare off investors with unrealistic numbers. 

How does a fractional CFO help secure funding and negotiate the best terms? 

1. As mentioned above, they can help you determine a fair valuation for your company. 
2. They help you decide how much equity you’re willing to give up, what that looks like, and which option is best for your business needs and growth plans. 
3. The negotiation begins. Your outsourced CFO will draft and negotiate the terms while keeping everything legally compliant. You won’t have to worry about getting lost in the weeds of equity distribution or repayment terms and can focus on running your company. 

A fractional CFO is your advocate during negotiations. They’ll navigate the complexities of securing funding to ensure everyone is on the same page and that the agreement aligns with your long-term business goals. 

Tip #4: Crafting the Infamous Pitch Deck

You gotta have it, and you have to do it well. Just like tip #1 of telling a compelling narrative, this takes it a step further. You want investors to be eager to jump on the bandwagon of growing your company, and to do that, you need a killer presentation. 

A fractional CFO can help you: 

• Nail down your value proposition. Why are you a good investment? How do you plan to capture your market? What proof do you have that you’ll be able to? Investors want more than numbers. They need you to paint a picture of your growth potential for them. 
• Develop detailed, realistic financial projections. Most investors can sniff out lies, so you don’t want to lie about or hide your true numbers. A fractional CFO will understand your financials inside and out so they can show potential investors exactly how their money will be used and what returns they can expect based on realistic, data-driven financial projections. 
• Highlight the strength of your team. You can have a great story, but investors are also investing in a team. Do you have what it takes? Your fractional CFO can showcase your team’s expertise and track record to give investors the confidence they need to trust you can be successful. 

Your pitch deck needs to shine, and a fractional CFO can help you achieve that. 

Tip #5: Network and Build Relationships

Fundraising is as much about what you know as who you know. A fractional CFO can tap into their extensive networks and relationships to find the right potential investors for your company. Not all investors invest in the same industries or stages of growth, so you’ll have to do your homework. 

Your financial partner likely attends key industry events and mingles with the right people to get on the radar of those who matter. How can a fractional CFO help your company with networking and building relationships? 

1. They can make introductions with their network of investors, bankers, and financial experts. 
2. They can organize one-on-one meetings with potential investors, and follow up with them to keep up the momentum.  
3. They can find events you should attend to open doors and build credibility with investors. 

As a founder, you should prioritize connecting with investors regularly, even when you aren’t fundraising. You can build relationships over time and share exciting updates about your business so that when the time comes to secure funding, you aren’t reaching out to them cold. 

Tip #6: Managing Capital and Reporting

So, you’ve successfully secured funding. Congrats! But that’s just the beginning. You don’t want to blow it all because you’ve never managed so much money before. Managing capital effectively is crucial for running a successful business and maintaining investor confidence. 

Your fractional CFO can: 

1. Set up robust financial systems to track and manage your funds. 
2. Provide regular updates to investors to keep them informed and engaged. 
3. Track KPIs to measure progress and make data-driven decisions. 

You want to ensure every dollar is maximized and accounted for. With the right systems in place and regular tracking and reporting, you’ll be able to avoid setbacks more efficiently and continue to build trust with your investors. 

Having a fractional CFO manage your capital and reporting means you can focus on growing your business without worrying about mismanaging or running out of money. 

Key Takeaways to Secure Funding with a Fractional CFO

Are you getting ready to secure funding and need to hire a fractional CFO? Here’s what you need to do. 

• Determine what financial expertise you need. 
• Look for a fractional CFO with experience in your industry and a track record of successful fundraising. 
• Onboard them with access to your financials and introduce them to the team. 
• Define what success looks like and set clear milestones. 

A fractional CFO can leverage their expertise to help you navigate the complex world of fundraising and secure the capital you need to get to the next stage of growth. The six ways they can secure funding are: 

1. Telling a compelling financial story to investors using accurate data and inspiring visuals. 
2. Determining your capital needs so you don’t raise too much or too little. 
3. Negotiating the best terms and ensuring you have an advocate on your team. 
4. Crafting a killer pitch deck to sway investors. 
5. Networking and helping you build meaningful investor relationships. 
6. Managing your capital and regularly reporting to investors to build confidence. 

Are you ready to get started? Contact Lineal to learn how we can get you the money you need to succeed. 

‍