When should a startup hire a fractional CFO?
The trigger is almost always dated rather than a revenue line, which is why startups hire this seat fast and why speed matters more here than in almost any other fractional engagement. What the seat is for changes at each stage.
- Pre-seed: rarely a standing seat. Half a day a week, often fortnightly, to build the model and the runway number and to get SEIS advance assurance in before the first cheque.
- Seed: the usual first hire of the seat. One day a week for board reporting, cash discipline and the first forecast anybody is held to.
- Series A: two days is the floor once a board exists and the next raise is being planned. Cohort economics, a costed hiring plan, and a data room that survives diligence.
- After Series A: three days is where fractional starts to cost more than it saves. The usual answer is a permanent finance leader with the fractional CFO above them for a period, or a full-time CFO outright.
Days a week and monthly cost, stage by stage
Funding stage decides the days far more than seniority does. The monthly figures below are the UK band at that number of days, computed rather than rounded off.
| Stage | Days a week | Monthly cost | What the seat delivers |
|---|---|---|---|
| Pre-seed | Half a day | £1,533 to £2,875 | The model, the runway number, and enough structure that a seed investor can diligence it. |
| Seed | 1 day | £3,067 to £5,750 | Board reporting, cash discipline, and the first proper forecast anybody is held to. |
| Series A | 2 days | £6,133 to £11,500 | Cohort economics, the monthly pack, hiring plan costed fully loaded, and the raise after this one. |
| Series B | 3 days | £9,200 to £17,250 | A finance team, audit readiness, revenue recognition that survives diligence. |
SEIS, EIS and advance assurance: what the CFO owns
SEIS and EIS give investors income tax relief on shares in a qualifying company, and UK angels routinely ask whether a round qualifies before they commit. Advance assurance is HMRC's view, before the round, that the company and the planned share issue look likely to qualify. It is optional, and investors ask for it anyway.
The CFO owns the parts that go wrong quietly: checking the company qualifies before anybody promises relief, preparing the application with a business plan and forecasts that match the deck, keeping the share terms inside the rules when a solicitor drafts the round, issuing SEIS shares before any EIS shares, and filing the compliance statement after the issue so HMRC can authorise the certificates investors claim with.
None of this is difficult. All of it is dated, and a founder doing it between investor meetings is how a round closes with relief that later turns out not to apply.
R&D tax relief: the claim notification rule
A company claiming R&D relief for the first time, or that has not claimed for some years, has to tell HMRC it intends to claim, on a claim notification form, inside a fixed window after the accounting period. Miss the window and the claim is invalid however good the work was. HMRC also expects a detailed information form before the claim itself.
This is the single most common way an early-stage company loses a relief it was entitled to, and it is a calendar problem rather than a tax one. A fractional CFO puts the date in the board calendar in the first month. HMRC's guidance also says when the notification requirement ends, so check the current page before relying on either.
EMI option schemes
Enterprise Management Incentives is the tax-advantaged option scheme most UK startups use to grant equity to employees. The finance work around it is small and unforgiving: agreeing a share valuation with HMRC before the grant, notifying each grant by the deadline, filing the annual share scheme return, and keeping the option pool, the cap table and the model telling the same story.
One point founders often learn late: EMI is for employees who meet a working-time test, so a fractional CFO on one or two days a week normally cannot hold EMI options. Equity for the fractional seat itself is usually an unapproved option or nothing at all.
Fractional, outsourced or virtual CFO for a startup?
Most funded startups need a fractional CFO and outsourced finance together. The fractional CFO is usually the person who tells you which outsourced provider to use, and the one best placed to say when its work is not good enough.
| What it is | Suits a startup when | |
|---|---|---|
| Fractional CFO | One named senior person holding the seat part-time, accountable to the board | There is a raise, a board, or a runway decision to own |
| Outsourced finance | A team doing the transactional work: bookkeeping, payroll, month end | The numbers arrive late or wrong, whatever the strategy |
| Virtual CFO | Usually a remote CFO service, often packaged by an accountancy firm with its bookkeeping | You want one provider for both, and accept that it is less independent |
What it does not own
Introductions to investors. A fractional CFO's contribution to a raise is the model, the data room and diligence, not a contact book, and a contact book is the most oversold thing in this market.
Being the finance team. At one or two days a week nobody is doing the bookkeeping, running payroll or chasing invoices. If those are broken, fix them underneath the seat rather than expecting the seat to absorb them.
What to ask in the interview
- Walk me through the last runway conversation you had to force. What triggered it and what changed?
- An investor wants the data room Monday. What is in it, and what do you refuse to rush?
- Which SEIS or EIS issue have you seen go wrong, and what would you check first here?
- At what point would you tell us to hire somebody full-time?
Common questions
How much does a fractional CFO cost for a startup?
In the UK the seat runs £800 to £1,500 a day. At one day a week, the usual seed shape, that is £3,067 to £5,750 a month; at two days, common at Series A or during a raise, it is £6,133 to £11,500. Pre-seed companies often buy half a day a week, which is £1,533 to £2,875 a month.
Do startup fractional CFOs take equity?
Some do, usually a small option grant alongside a day rate rather than instead of one. Because a fractional CFO normally fails the EMI working-time test, the options are usually unapproved rather than EMI. Agree the vesting and what happens on exit in writing, and treat any offer to work for equity alone with care.
Can a fractional CFO run our fundraise?
They can run the finance side of it: the model, the data room, diligence, SEIS or EIS advance assurance and the investor questions on numbers. The founder still runs the raise itself, the story and the relationships. Expect the days to rise to two a week while the round is live and fall back afterwards.
How many days a week does a startup need?
One day a week is the usual starting point, moving to two while a raise is live. Below one day nobody can hold the function. Above three days consistently, a part-time employee or a full-time hire is normally the better structure.
More of them, on hiring, contracts and what a fractional engagement costs, on the fractional executive FAQ.