Finding a CFO That Can Help Raise Funding for My Business

CFOs are fundraising wizards. They have the soft skills and network to connect companies with fundraising opportunities across the industry, from debt refinancing with high-street banks to securing venture capital funding.

Many start-ups and SMEs find themselves with a fundraising skills gap. This problem is particularly difficult for companies where the CEO and senior leadership team lacks previous experience engaging with private investors and financial institutions.

Recruiting a CFO can help you raise funding for your company through debt and equity financing. Our portfolio of CFOs has a track record of meeting fundraising goals through debt financing, private equity, and government grants.

FD Capital is the UK’s leading financial recruitment agency, connecting start-ups and SMEs with industry-leading CFOs. We offer a 360-degree approach to recruitment with dedicated headhunting services and traditional recruitment options. Start your search for a fundraising CFO today by contacting us at recruitment@fdcapital.co.uk.

Determining The Capital Needed and The Narrative

The first step for a CFO overseeing fundraising efforts is to determine how much capital the company needs, what it will be spent on, and the narrative. The CFO will consider what type of funding – such as Series A or private investing for an IPO – the company needs and plan accordingly.

A CFO will want to create an engaging investor story with financial data to back up their narrative. They’ll work in unison with the CEO to translate the company’s vision and long-term goal to sell it to potential private investors and financial intuitions.

We’re breaking down some of the most popular funding types to showcase how a CFO can help you raise capital for your company.

Debt Financing

CFOs will have previously worked with traditional financial institutions throughout their career, including banks, whom they have nurtured trusting relationships with. These networks and connections enable CFOs to negotiate more favourable terms and interest rates for companies during debt financing.  Some CFOs will determine that trading equity dilution in exchange for more liquidity through debt financing is the best option for them.

A CFO will utilise data and real-time forecasting, alongside scenario models, to present a financial case for banks to offer debt financing. Debt refinancing is a time-consuming process, presenting the option of recruiting a part-time CFO to oversee the process and free up the CEO’s time. The CFO will strive to raise enough capital or debt to meet the company’s immediate cash flow needs and to ensure its continued operations in the short-term.

CFOs will work to introduce cost-saving measures to streamline the company’s operations and maximise productivity while creating a positive environment that can promote revenue growth. This work will sit alongside the CFO’s responsibilities with overseeing fundraising efforts.

There are various types of debt fundraising that a CFO can consider, and most will implement cost-saving initiatives concurrently to maximise cash flow and liquidity. Most CFOs will therefore implement operational changes within their organisations, requiring a CFO who can engage with internal and external stakeholders.

Government Grants and Loans

One under-utilised source of funding for SMEs in the UK is government grants and loans, particularly the ‘Enterprise Finance Guarantee’. The British Business Bank’s Enterprise Finance Guarantee (EFG) launched in 2009 and has provided over £3.3bn in financing to more than 35,000 smaller businesses across the UK.

The EFG offers guarantees for loans to fund business expansion, valued between £1,000 and £1.2 million. These financial agreements come with terms between three months and 10 years for term loans and asset finance, while invoice finance and revolving facilities have up to three years of finance terms.

CFOs can apply for a government-backed loan through the Enterprise Finance Guarantee if the company is UK based with turnover under £41 million per annum and operates within an eligible industrial sector. The CFO will need to present a sound borrowing proposal while showing that the company has inadequate security to meet the requirements of traditional lenders.

Your CFO will want to assess the economic impact of undertaking any government assistance, particularly if there is a tax incentive involved.

Determining the Right Private Equity Funding

The funding option that most start-ups and SMEs will explore is private equity. There are various types of private equity funding that a company can apply for, but not all will meet the needs or structure of your business.

A CFO will start their funding strategy by determining what is the best type of private equity for the company to apply for. This strategy includes determining who the ideal investor is and what type of investor relationship the company wants. A high-net worth individual may take a more hands-off approach, while a private equity house may expect more direct involvement at board level.

Managing The Due Diligence Process

Due diligence is two-fold for CFOs when they are helping a company raise funding. CFOs will leverage data and financial planning tools to ensure that they can create an accurate financial model that translates the company’s value to potential investors. Similarly, the CFO will need to perform their due diligence on any potential private equity investors in determining whether they are a good fit for the company.

Your CFO will be responsible for ensuring that all data and information presented to potential investors is accurate and not misleading.  Due diligence forms a vital component of the planning process when exploring private equity funding.

Private Equity Houses

A fundraising CFO will identify potential private equity houses to target and pitch your company alongside the CEO, although the CFO will act as a bridge between the two.

Having a CFO on board boosts investor confidence by assuring them that your company is meeting regulatory compliance and has financial oversight in place. Private equity houses are increasingly demanding more financial transparency from potential partners.

SMEs may choose to recruit a part-time CFO to explore private equity funding options and manage investor relations, particularly if they are filling a CEO’s skills gap. We recommend recruiting a CFO at least 3 months prior to a funding round to enable them to get your company’s finances in order, including conducting any necessary audits.

Leveraged Buyouts

Another funding option for businesses that a CFO will present is leveraged buyouts – known as LBOs. This type of transaction involves a private equity firm purchasing company through debt financing, collateralised against the company’s assets and operations.

Private equity houses therefore only put up a small amount of the purchase price and leverage the investment to maximise their potential return. This form of private equity won’t work for every business but is ideal for business owners looking for an exit strategy.

High Net Worth Individuals

Your CFO will also explore whether high-net-worth individuals (HNWIs) are an ideal solution for your company. HNWIs are individuals with at least £1 million in liquid financial assets and who invest in private equity and venture capital funds, alongside investing privately into companies.

These individuals are often referred to as ‘angel investors’ and are often the first source of third-party capital for start-ups and SMEs. Private equity firms are increasingly working with HNWIs on wealth management funds. CFOs can approach HNWIs through private equity firms or directly, depending on their network connections.

CFOs who can offer personalised experiences and engaging investment products can cut out the middleman and work directly with interested HNWIs. They’ll work with the CEO to determine what investor profile they want to target.

Angel investors typically make either one-off contributions, personal investments, or follow a long-term reinvestment strategy over a five year or less time frame. The CFO will agree on a potential investor offering for HNWIs prior to launching their strategy.

Venture Capital Funds

Companies seeking to navigate the venture capital space will be more successful with a CFO. Venture capital is rapidly expanding and presents a golden opportunity for start-ups and SMEs. Your CFO will create an engaging investor story to pitch to venture capitalists and develop a strategy to drive value creation.

CFOs responsible for VC fundraising move at a face pace, engaging with internal and external stakeholders, while tracking KPIs and taking a forward-thinking approach to finances. Most venture capitalists will operate by negotiating directly with the CFO on behalf of the CEO, expecting them to deliver a high-level overview of the company’s finances.

A fundraising CFO provides financial transparency and a new perspective on your company’s finances prior to undertaking funding cycles. They’ll offer an unbiased approach and won’t be afraid to challenge the status quo by overhauling existing systems and structures, including investing in digital tools.

It’s worth noting that most venture capital agreements typically have a holding period of 5 to 7 years. Stakeholder management is therefore vital for CFOs to maintain investor confidence. CFOs with consultancy and entrepreneurial backgrounds are ideal candidates for helping companies navigate venture capital funding.

Seed Funding

You may think appointing a CFO at a pre-seed start-up is putting the cart before the horse. However, the rise of part-time CFOs means that these top-level talents are more accessible than ever for companies at their initial fundraising stage. Your CFO will put systems in place to support the company’s development and fundraising strategy.

The expansion of the seed funding industry has led to a rise in online platforms that offer start-ups new opportunities to kickstart their funding. Private equity crowdfunding is an emerging space amongst seed funding opportunities, making capital more accessible for companies and entrepreneurs.

This type of seed funding is like normal individuals raising money online. Wefunder, SeedInvest, Crowdfunder, CircleUp, SeedRs and AngelList are popular private equity crowdfunding platforms that CFOs can explore when fundraising. It’s important to note that these fundraising platforms are becoming increasingly regulated, but CFOs are best placed to provide advice and direction on this as they’ll be familiar with current regulations.

Recruiting a remote CFO to support your seed fundraising is the most cost-effective option for start-ups and SMEs. The path to a successful seed funding cycle starts with recruiting a CFO to translate your company’s story and maximise its future valuation, while exploring next-generation seed fundraising opportunities.

Series A Funding

Series A funding falls into a similar category as seed fundraising. Most companies will want to recruit a CFO at least three months prior starting a funding round. At FD Capital, most CFOs we recruit to oversee series A funding are hired on a part-time or remote basis.

Recruiting prior to starting the funding cycle provides your CFO with time to implement KPI tracking, overhaul financial systems, and streamline operations to make your company more attractive to potential PE houses and venture capitalists. It also provides time for your CFO to integrate themselves into the company culture.

We’ll connect your company with a candidate who has the skills and experience to achieve your Series A funding goals. Our CFO headhunting services are ideal for companies and CEOs who want to take a more hands-on approach to their recruitment and who want a quick appointment to kickstart their funding cycle.

The CEO-CFO relationship is crucial when raising funding for any business. Venture capitalists and private equity investors will expect the CFO to act as a bridge between them and your company, engaging with them on behalf of the CEO.

When CFOs focus on investor relations, they enable the company’s CEO to focus on the bigger picture. The CFO will offer briefings and financial reports, alongside ensuring KPIs are being tracked and met.

Recruit a Fundraising CFO Today

FD Capital will help you unlock your company’s potential by recruiting a specialist fundraising CFO who can explore debt and equity funding opportunities for your company. We’re proud to be the UK’s leading financial recruitment agency with a network of top-level talent, including CFOs with a proven track record of delivering on venture capital and private equity funding.

We offer both traditional recruitment services and CFO headhunting services, tailoring the recruitment process to fit the requirements of your organisation and your fundraising goals. We’ll connect you with a CFO who will form a winning partnership with your CEO.

Recruit a CFO to oversee your fundraising strategy by contacting our team at recruitment@fdcapital.co.uk or 020 3287 9501 today.