When to hire a CFO

A CFO hired too early is expensive and runs the risk of them getting bored and leaving, and a CFO hired too late can be the reason a Series A doesn’t happen. This guide is about pinning down that inflection point, written for consumer businesses at Series A and the run-up to it.

Where a CFO earns their salary is late seed into Series A, when a round is six to twelve months out and the business has enough complexity to keep them busy between raises. Before that, the right hire is more often a Head of Finance or an FD, with a fractional CFO for the raise if you need one. The title matters less than the job though. What you’re deciding is whether you need someone who can sit across from an investor as a peer, or someone who can build you a model and keep the books straight, and those are different people that cost different amounts.

What a CFO actually does

Strip away the title and a CFO at an early-stage business does four things a Head of Finance usually doesn’t.

They lead the raise. They help build the story, run the data room, handle term sheet negotiation and know which investor’s terms to push back on.

They own the capital structure: debt vs equity, revenue-based financing, convertible notes, working capital facilities for stock. At a consumer business with inventory, knowing the difference avoids raising dilutive money when you don’t need to.

They talk to the board as an equal. A Head of Finance presents the numbers whereas a CFO explains what they mean and has a plan based off the back of them.

They think about the exit from day one - which acquirers care about what metrics, and what the business needs to look like in three years to achieve the number you want to sell at.

If you don’t have those four problems yet, you probably don’t need a CFO yet.

The triggers

These are the situations where a CFO hire pays for itself at late seed or Series A.

The founder has no finance background and is raising a large round. If you’re a brand or product person raising £3m or more, the gap between you and a finance-literate investor is what a CFO closes.

Stock-heavy model with working capital needs. If you’re buying inventory three months ahead of sales, someone needs to be thinking about financing that gap rather than just funding it with equity.

Multiple revenue lines or channels. DTC plus retail plus marketplace plus subscription is four sets of economics. A Head of Finance can report on them whereas a CFO looks at the data and advises you which to grow.

An exit or a strategic conversation is live. If an acquirer or a strategic investor is circling, you need someone who’s been through the process.

Series B is in sight. As revenue approaches £10m with a larger round ahead, the question stops being whether and becomes who.

I’ll tell you about the one I got wrong, because it’s the reason Suma exists.

At Apex we’d outgrown our bookkeeper and I’d found several really strong FD candidates that could have been great for the role: commercial, startup-experienced, the right level for where we were. But we had an investor who pushed hard for a candidate of his own, a senior finance person from a large listed business in a sector nothing like ours. He was a competent finance professional but he had no consumer experience, no startup experience, and in all honesty he didn’t fit the team. But pushing back on an investor’s candidate when you’re mid-raise and they hold the cheque is a hard conversation. If you’ve found yourself in that position, or something like it, I’ve been on your side of the table and I’m happy to help you think it through, whether or not it turns into a search.

Two things I took from it either way: industry experience isn’t a nice-to-have at this stage; it’s crucial. And a candidate who arrives through an investor still has to pass the same bar as everyone else.

When a Head of Finance is enough

If the honest list of what you need is a model, a board pack, clean books, VAT, payroll, and a data room then that’s a Head of Finance. Hiring a CFO for that job means paying £40k+ a year more for someone who’ll likely leave if there isn’t enough strategic work. I’ve written about that first hire separately.

Full-time or fractional

For most of the triggers above however, a fractional CFO one or two days a week is worth considering before a full-time hire. If the raise, the capital structure and the board conversations are lumpy: intense for three months, quiet for six then fractional fits that perfectly. The fractional guide goes through where it works and where it doesn’t.

What it costs

From my CFO benchmarks: full-time at seed is £80k to £120k rising to £120k to £160k at Series A, plus equity of 0.75% to 2% at seed. Fractional runs £500 to £1,200 a day at seed. Someone who’s led a seed-to-Series-A raise before sits at the top of those ranges - and that experience can be worth paying a premium for.

The person, not the title

The best early-stage CFOs I’ve placed are those who’ve done the job before, can build the model, run the raise, and are content that the finance team is them and a part-time bookkeeper. A plc CFO who’s spent fifteen years with a team of twenty is almost always the wrong hire, and they’ll spend the first six months trying to rebuild what they’re used to.

If you’re not sure which of these you need, get in touch. I’ll give you a straight answer, including if the answer is that you don’t need to hire anyone yet.