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Small Business Guide

How Fractional CFOs Help Startups Get Ready for Fundraising

Avigail Feldman
July 20, 2025
5 min read

Raising capital is more than telling a good story. Investors want numbers that back it up.

Contents

    As a founder, you might have the product, the pitch, and the vision—but if you’re heading into a funding round without financials that stand up to scrutiny, you're risking more than just a “no.” You're risking losing investor confidence.

    That’s where a fractional CFO comes in.

    A fractional CFO helps startups build the financial foundation needed for investor conversations. From forecasting to due diligence, they make sure your numbers are as polished as your pitch. Whether you're prepping for your first seed round or scaling toward Series A, this post breaks down exactly how a fractional CFO for business startups can help you raise with confidence.

    What is a fractional CFO?

    A fractional CFO is a senior finance executive who works with your startup on a part-time or project basis. They deliver all the expertise of a traditional CFO—without the full-time cost.

    Think of them as your on-demand strategic finance partner. While you focus on growing the business, a fractional CFO:

    • Builds long-term financial models
    • Develops budgets and forecasts
    • Tracks key metrics
    • Interfaces with investors
    • Guides financial decision-making

    Startups often can’t afford (or don’t need) a full-time CFO early on. But they do need someone who knows what investors want, understands the numbers, and can help present a credible growth story. A fractional CFO fills that gap, especially in the lead-up to a funding round.

    Learn more about Function’s CFO Services.

    When Should a Startup Bring on a Fractional CFO?

    The best time to bring in a fractional CFO isn’t after investor interest—it’s before.

    Here are the key moments where hiring one makes the biggest difference:

    1. Before a Seed or Series A Round
      Founders need a compelling, data-backed story to win early capital. A fractional CFO helps prep the financials, answer tough questions, and make sure your pitch deck aligns with reality.
    2. During Rapid Growth
      Fast-growing startups often struggle with cash flow visibility and forecasting. A fractional CFO helps build financial infrastructure that keeps up with your pace.
    3. Entering New Markets
      Expanding internationally? Launching a new product line? You’ll need a solid financial strategy to support the move and explain it to investors.
    4. Building Financial Reports for the First Time
      If your current "reporting system" is a spreadsheet you only open at tax time, it’s time to bring in help. A CFO helps get your numbers in order, before it turns into a mess.

    How a Fractional CFO Supports Fundraising at the Seed and Series A Stage

    Founders often ask: “What does a fractional CFO actually do during a fundraise?”

    Let’s break it down. A good fractional CFO will help your startup:

    Build or Refine Financial Models

    Financial models are more than spreadsheets. They’re the blueprint for how your business grows, and investors are going to dig deep. A fractional CFO builds models that are:

    • Clear and easy to read
    • Matched to your business model (SaaS, eCommerce, marketplace, etc.)
    • Flexible enough to run different scenarios

    Models typically include:

    • Revenue projections
    • Expense breakdowns
    • Hiring roadmap
    • Use-of-funds plan
    • Burn rate and runway analysis

    Experts agree that CFO support can significantly improve funding outcomes. This post by McCracken Alliance explains why strategic finance is essential during a raise.

    Create Budgets and Forecasts

    A budget helps you manage your spend. A forecast helps you plan for growth. Investors want to see both, and they want to know your assumptions are rooted in data, not hope.

    A fractional CFO helps define reasonable, achievable projections backed by market data and internal performance.

    Track Key Metrics

    Before you pitch, you should be fluent in your numbers. A fractional CFO helps you track KPIs investors care about:

    • Burn rate
    • Customer acquisition cost (CAC)
    • Lifetime value (LTV)
    • Churn rate
    • Gross margin
    • Payback period

    The right metrics help tell a story of efficiency, traction, and scale.

    Prepare Financial Slides for Your Investor Deck

    Investors don’t just look at your product—they look at the numbers behind it. A CFO ensures your deck includes:

    • Clear revenue growth charts
    • Expense breakdowns
    • Forecasts tied to strategic milestones
    • Burn and runway projections
    • Capital allocation plans

    More importantly, they help ensure your narrative and numbers match (more on that below).

    Run Funding Scenarios

    What happens if you raise $500k instead of $1M? Can you still hit your growth targets? A fractional CFO helps run best-case, worst-case, and most likely scenarios—so you know exactly how much to raise and how far it’ll take you.

    Building Financial Models That Investors Trust

    Let’s zoom in on this, because a solid financial model can make or break a round.

    A strong model includes:

    • Top-down and bottom-up revenue estimates
    • Unit economics (how much you make vs. spend per customer)
    • Operating expenses (by department or initiative)
    • Headcount plans with associated costs
    • CapEx and use-of-funds strategy
    • Burn rate and cash runway calculations

    What sets a good model apart?

    ✔️ It's tailored to your business model
    ✔️ It's easy to update as assumptions change
    ✔️ It aligns with your pitch deck narrative
    ✔️ It avoids unrealistic hockey-stick growth without justification

    Investors will poke holes in your projections, your CFO helps make sure those holes are hard to find.

    Preparing for Due Diligence

    Once you get investor interest, the real fun begins: due diligence.

    This is where investors validate your claims, review your finances, and decide whether your business is worth the risk.

    A fractional CFO helps you prep for this by organizing and delivering:

    • Financial statements (P&L, balance sheet, cash flow)
    • Bank and credit card reconciliations
    • Customer contracts and revenue details
    • Cap table and equity history
    • Tax filings and compliance docs
    • Explanations for any irregularities or adjustments

    The faster and cleaner your response, the more confidence you build. If you're fumbling to explain last quarter’s burn rate, you're going to raise red flags.

    Want to get ahead of the cleanup? Function’s Bookkeeping Services are built for pre-fundraise prep.

    Aligning Financials with Your Pitch Deck

    Here’s a common disconnect: your deck says one thing, your numbers say another.

    You might tell investors your business runs efficiently, but your spending shows otherwise. Or you say customers love your product, but the numbers show many are leaving.

    A fractional CFO helps align your financial story with your narrative:

    • Clarifying what metrics best support your growth thesis
    • Stress-testing assumptions behind your forecasts
    • Making sure revenue, margin, and runway estimates are consistent across all materials

    Remember: investors don’t just invest in ideas. They invest in execution. Your CFO makes sure the numbers prove you can deliver.

    How Function Partners with Founders During Fundraising

    At Function, we’ve helped startups prepare for their first raise—and their fifth. We know what VCs are looking for, and we help startups show up ready.

    Here’s what that looks like in practice:

    • We review and clean up your historical financials
    • We build flexible models with clearly defined assumptions
    • We track investor KPIs and highlight strengths
    • We create polished decks that make the numbers shine
    • We prep you for Q&A with common investor objections and data-driven responses
    • We support due diligence with fast, organized handoffs

    And it doesn’t stop at the raise.

    Function provides ongoing monthly support, so you’re never flying blind post-funding. With clear dashboards, forecast updates, and strategic input, we help you make smarter financial decisions, long after the term sheet is signed. 

    Final Thoughts: Don’t Fundraise Without Financial Clarity

    Founders are visionaries. But even the best vision needs numbers behind it.

    A fractional CFO for business startups isn’t just a tactical hire, it’s a strategic advantage. With the right financial partner, your story becomes stronger, your pitch more persuasive, and your raise more successful.

    If you're getting ready to fundraise, let Function be your partner in finance. We’ll help you go in prepared, confident, and ready to win.

    Frequently
    asked
    questions

    What’s the difference between a debit and a credit in business accounting?

    In accounting, a debit is an entry that increases assets or expenses, while a credit increases liabilities, equity, or revenue. Every transaction affects at least two accounts — one with a debit and one with a credit — to keep your books balanced.

    Do debits always mean money coming in and credits mean money going out?

    Not exactly. It depends on the type of account. For example, debiting an expense means you're spending money, but debiting an asset like cash means you're receiving money. That’s why understanding account types is essential.

    Why do I need to understand debits and credits if I have a bookkeeper?

    Even if someone else handles your books, knowing the basics helps you read financial reports, ask better questions, and make smarter business decisions. It also makes you a stronger communicator with your finance team or investors.

    What’s a T-account, and how does it help?

    A T-account is a simple visual tool used in accounting to show how a transaction affects two accounts. Debits go on the left, credits on the right. It’s a great way to visualize the flow of money and keep things balanced.

    How can I tell if my financial reports are accurate?

    Look for common red flags: negative balances, uncategorized transactions, or mismatched totals. If you’re unsure, it’s worth having a professional review your books to make sure everything aligns before big decisions or tax time.

    Frequently
    asked
    questions

    Why does Josh describe accountants as “storytellers”?

    Josh believes the value of accounting lies in interpretation, not calculation. Tools such as Exce; already do the math—what founders need is someone to explain what the numbers mean and how they impact strategic decisions. That’s why Function focuses on turning data into stories that help drive business forward.

    How is Function designed to scale without losing personal service?

    Josh built Function with intention: hire thoughtfully, delegate wisely, and embed values into every part of the team. Delegation wasn’t easy, but it allowed Function to grow without becoming impersonal. The goal is to deliver high-touch service at scale—and keep founders from burning out trying to do everything themselves.

    What problem is Function solving for startup founders?

    Function addresses a common frustration: most founders are left to interpret their own financial data. Instead of delivering static reports, Function turns numbers into clear, actionable insights that guide decision-making—pushing information to founders rather than making them dig for it.

    How do I get started with Function?

    Getting started with Function is simple. Founders can visit onefunction.com to book an intro call, learn more about the services offered, and see if the team is the right fit. The onboarding process is built to be smooth and tailored—starting with a conversation about your current financial setup, goals, and the support you need to grow confidently.

    What does Function mean by being “the adult in the room”?

    In today’s tougher funding environment, investors expect startups to be more financially disciplined. Function steps in with experienced, unbiased financial guidance to help founders stay focused, meet their targets, and present investor-ready financials.

    Frequently
    asked
    questions

    I’m not making money yet—do I really need bookkeeping?

    Yes. Even if you’re pre-revenue, you’re likely spending money—whether on software, legal fees, marketing, or contractors. Bookkeeping helps you track those costs, stay organized for taxes, and prepare for investor conversations before they happen.

    Can’t I just wait and figure it out later?

    Waiting often creates more problems than it solves. Messy or missing records can lead to costly cleanup, missed tax deductions, or even lost funding opportunities. Getting your books in order early means less stress and smarter decisions from day one.

    What kind of bookkeeping support does a startup actually need?

    It depends on your stage and growth plans. In the beginning, you may just need basic transaction tracking. As you scale, you’ll need deeper insights, reporting, and forecasting. Function grows with you—from clean books to CFO-level strategy.

    How does Function make bookkeeping easier for founders?

    We handle the financial heavy lifting, so you don’t have to. From tracking expenses to CFO strategy insights, Function gives you clean, up-to-date books and actionable information—so you can focus on building, not balancing spreadsheets.

    Frequently
    asked
    questions

    What does a fractional CFO for business startups actually do during fundraising?

    A fractional CFO helps build your financial model, prepare forecasts, clean up your reports, align your pitch with your numbers, and get all the due diligence materials ready. They also help you answer tough investor questions with confidence.

    When should a startup hire a fractional CFO before fundraising?

    Ideally, at least 2–3 months before you plan to start pitching. This gives enough time to get your books in order, build your model, and craft a deck that reflects your financial story.

    How does a fractional CFO improve a startup’s chances with investors?

    Investors fund confidence. A fractional CFO ensures your financials are credible, consistent, and well-prepared, reducing red flags and speeding up diligence. This can significantly improve your chances of getting a “yes.”

    Frequently
    asked
    questions

    Who needs to follow Form 5472 instructions and file the form?

    Any U.S. corporation with at least 25% foreign ownership, and any foreign-owned single-member LLC with U.S. operations, is likely required to file Form 5472, especially if they engage in reportable transactions with foreign entities.

    What kind of transactions require disclosure on Form 5472?

    Common reportable transactions include loans, payments for services, capital contributions, reimbursements, and management fees between a U.S. company and a foreign-related party.

    What happens if I don’t file Form 5472 correctly or on time?

    You could face a minimum of $25,000 penalty per year. If you fail to respond to IRS follow-ups, the penalties may increase. Non-filing can also create issues during fundraising, audits, or acquisitions.

    Frequently
    asked
    questions

    What is QuickBooks, and how does it work for U.S. businesses?

    QuickBooks is accounting software that works through your web browser or mobile app. Small and mid-sized businesses use it to manage their daily finances - from creating invoices and tracking expenses to handling payroll and tax preparation. The software connects with U.S. banks, includes standard tax forms, and integrates with over 650 business applications.

    How much does QuickBooks cost?

    QuickBooks has four main plans:
    Simple Start: $38 monthly
    Essentials: $74 monthly
    Plus: $115 monthly
    Advanced: $275 monthly

    QuickBooks often runs promotions with significant discounts. Additional services like payroll require separate subscriptions. See QuickBooks Online Pricing & Free Trial

    What features does QuickBooks offer?

    The software provides essential accounting and business management tools. Standard features include:

    • Invoicing and payments
    • Expense and bill tracking
    • Inventory management
    • Financial reports
    • Connections with over 650 business apps
    • Multicurrency
    • Payroll (additional subscription)
    • Time tracking (additional subscription)
    How do I move from QuickBooks Desktop to QuickBooks Online?

    Intuit provides a tool to help Desktop users switch to QuickBooks Online. The tool transfers your customers, vendors, account balances, and transactions. Check Intuit's migration guide first, as some advanced features may not transfer over to the online version. See: Migration Tool

    Does QuickBooks work with other business software?

    QuickBooks connects with more than 650 business applications. This includes popular tools for customer management, online stores, project tracking, and tax preparation like TurboTax. These integrations streamline your workflow by connecting your business tools in one system. See: QuickBooks Integrations

    What payment types does QuickBooks support?

    QuickBooks Payments lets you accept credit cards, debit cards, ACH transfers, and Apple Pay. All payments automatically record in your QuickBooks account, eliminating manual entry. Transaction fees apply. See: QuickBooks Payments

    Can I run payroll with QuickBooks?

    Yes, QuickBooks offers payroll as an add-on service with different plans for U.S. businesses. The service handles direct deposits, tax calculations, and IRS filings. All payroll data integrates directly with your QuickBooks accounting. Choose from Core, Premium, or Elite plans based on your needs. See: QuickBooks Payroll Services

    Can it handle international currencies?

    Yes - the Essentials, Plus, and Advanced plans let you work in multiple currencies. QuickBooks handles the exchange rates and tracks any gains or losses from currency changes. See: Multicurrency in QuickBooks

    What reports does QuickBooks generate?

    QuickBooks generates standard financial reports, including:

    • Profit & Loss Statement
    • Balance Sheet
    • Cash Flow Statement
    • Sales by Product/Service
    • Expenses by Vendor
    • Customer Aging Reports

    The Advanced plan includes more customization options for reporting. See: QuickBooks Reporting

    Is my data secure?

    QuickBooks uses bank-grade encryption and automatically backs up your data. Intuit stores everything on secure servers and runs regular security audits. You can also enable two-factor authentication for additional protection. See: QuickBooks Security

    Does it work for freelancers and self-employed individuals?

    QuickBooks offers a separate version called QuickBooks Self-Employed. This version focuses on what freelancers and contractors need most - tracking income and expenses, sending invoices, and preparing for taxes. It connects with TurboTax for easier tax filing. See: QuickBooks for Self-Employed

    Can multiple users access QuickBooks?

    Yes, each plan allows a different number of users:

    • Simple Start: 1 user
    • Essentials: 3 users
    • Plus: 5 users
    • Advanced: 5 users

    You can control what each person can access in the system.

    Can I connect my bank accounts?

    QuickBooks connects directly to your bank accounts and credit cards to import transactions automatically. This keeps your records current and reduces manual data entry. See: Importing Bank Transactions

    Does it support specific industries?

    While QuickBooks works for most general business needs, it doesn't have industry-specific versions. Some businesses, like construction or manufacturing, might need additional apps or integrations for specialized features.

    What if I need help?

    QuickBooks provides support through live chat, phone support, and online tutorials. Advanced plan users get a dedicated account manager. For specialized help, you can work with a certified QuickBooks ProAdvisor. See: QuickBooks Support

    Is there a mobile app?

    Yes, QuickBooks has an app for iOS and Android devices. You can create invoices, track expenses, and log miles from your phone. See: Mobile app

    Does it help with tax preparation?

    QuickBooks helps organize your tax information through expense categorization and tax reports. Its integration with TurboTax makes filing easier for both businesses and self-employed users. See: TurboTax Integration

    Frequently
    asked
    questions

    What do bookkeeping tax services include?

    Tax-focused bookkeeping services include recording all business income and expenses, reconciling bank and credit card accounts, organizing the general ledger, and preparing tax-ready financial reports like the P&L and balance sheet. Some also help with 1099s and coordinate with your CPA.

    How do I know if my books are tax-ready?

    Your books are tax-ready if:

    1. All transactions are categorized correctly
    2. Your accounts are reconciled through year-end
    3. You have no duplicates, missing info, or personal expenses mixed in
    4. Your P&L, balance sheet, and general ledger are clean and complete
    When should I hire a professional for bookkeeping tax services?

    If you're behind on your books, unsure how to prepare reports, or experiencing growth and complexity in your finances, it’s time to hire a professional. Don’t try to clean up months of data right before tax time.

    Start smarter—and make your finances function as one

    Discover how Function streamlines your finances and scales with you at every stage.

    Start with Function