Fractional CFOs required by many startups

• There is a growing demand for Virtual CFOs and Fractional CFOs in early-stage startups to provide experienced financial guidance.
• However, many CFOs or Finance Professionals are hesitant to leave the luxury or stability of an established company for a smaller or mid-sized company.
• At The Finance Story Bangalore Event, we caught up with Dipanjan Basu, Co-founder and Partner at Fireside Ventures, and Sriram Iyer, Former Managing Director of Accenture, to discuss the opportunities in this role.

What is a Fractional CFO?

Every company, regardless of size or revenue, needs a financial expert to navigate the ever-changing business landscape.

While large corporations have the luxury of full-time CFOs, early-stage startups, and smaller businesses often struggle to access this crucial expertise.

Enter Fractional CFOs.

Fractional CFOs, or Remote CFOs, have become increasingly popular in the aftermath of the pandemic.

These financial experts offer CFO-level support to companies either part-time or on a project basis.

In an excerpt from The Finance Story Bangalore Event, Dipanjan Basu, Co-founder and Partner at Fireside Ventures, and Sriram Iyer, Former Managing Director of Accenture, discuss the value of these experienced finance professionals in startups and the potential career paths available.

The evolving role of CFOs in startups

Karandeep Singh, CFO of NODWIN Gaming and our host for the panel raised an essential question about whether having a seasoned or part-time finance professional gives investors more confidence.

Dipanjan responded affirmatively, highlighting that the experience and expertise of CFOs who have seen scale and processes in established companies are invaluable.

He stated, “The ability to guide young founders in setting the building blocks right is a big help. We are seeing good examples of senior CFOs working with two or three startups, not just in a fractional role but meaningfully playing the CFO role.”

Also read: Left my full-time job to become a Fractional CFO on Toptal: You can earn 3 to 10 Times Your Salary! 

Fractional CFOs vs. Full-time MNC CFOs

Sriram shared his perspective on transitioning from a long career in MNCs to working with startups.

He pointed out the significant differences between the two environments, particularly in terms of raising money, working with promoters, and taking risks.

Sriram emphasizes, “It’s very difficult from an MNC standpoint to do what Fractional CFOs do. We don’t raise money or work with promoters; we can talk well, but that’s not enough.

The key roles for a CFO in a startup involve putting all parts of your body on the line every day.”

Addressing the talent gap

Dipanjan also pointed out the significant talent gap in high-quality finance professionals in early-stage companies.

Many successful finance professionals are hesitant to move to smaller companies due to the perceived risks and uncertainties.

He mentions, “We find a big gap in high-quality finance talent in early-stage companies. However, leaving a large role in an established company for a smaller company with uncertainties is tough.”

Huge opportunity for Fractional CFOs

The concept of Fractional CFOs or part-time CFOs is still evolving.

However, professionals and businesses are slowly but steadily coming around to the fact that Fractional CFOs can be as good as, if not better, than full-time CFOs.

Dipanjan concluded, “This is a wide untapped space. Successful finance professionals need to see the opportunity to work with early-stage companies and make a difference. It’s a tough but rewarding path.”

Also read: Fractional CFO is an Untapped Opportunity in India. Step-by-Step Guide to Becoming a Finance Expert on Toptal.

Should you become a Fractional CFO?

Dipanjan highlighted that the shift for finance professionals from MNCs to the fractional CFO space should not be seen as a linear career move.

It should rather be seen as an opportunity to work closely with founders and help companies grow.

He states, “One should be keen on working with founders and have a passion for helping companies.”

Wrapping up

There is a growing demand for Virtual CFOs and Fractional CFOs in early-stage startups to provide experienced financial guidance.

This role requires embracing the shift from traditional career paths to more dynamic and impactful roles.

As the landscape continues to evolve, the impact of these finance professionals can shape the future of the startup and business ecosystem as a whole.