Financial planning for SaaS startups is getting more complex by the minute. After all, nearly every startup either wants to be the next big thing, think Lokalise, Printify, ProtonVPN, or LinkTree, or they have high hopes of getting the attention of even bigger businesses interested in buying them. To set the stage for the greatest possible success, it is in your best interest to consider a SaaS startup fractional CFO for your startup, but how do you find a professional such as this?
More importantly, what should you look for when choosing one for your startup? Whether your goal is to sell your startup after a wildly successful ride or you plan to ride the wave as far as it will take you, startup capital is essential.
What Is a SaaS Startup Fractional CFO?
With the world of startups changing rapidly, so is the need for various support professionals, like startup fractional CFOs. While SaaS startups face somewhat unique needs over standard brick-and-mortar businesses or those who deal in physical products, the fact remains that you still need funds to launch your business, as well as solid financial analysis and advice. A fractional CFO that specializes not only in startups but in SaaS startups can be a boon for your prospects.
How does a fractional CFO help startups? In more ways than you might expect. These are just a few of the ways the right SaaS startup fractional CFO can help your organization.
Modeling and Cash Flow Planning
Essentially, the modeling and cash flow planning of your startup is a vital step. It factors in many critical details to provide you and potential investors with an idea of the risks taken by investing in your startup, compared to the potential rewards that can be achieved. It also helps you create a roadmap for your business trajectory.
Among the factors that impact your SaaS startup's modeling are the following:
Industry.
Demand for the service your software provides.
Costs of operating or getting your business off the ground.
Competition among other established businesses and startups.
The reputation of your team.
A solid and experienced fractional CFO understands the formulation involved in creating effective and accurate models and knows, all too well, the impact a model can have on potential investors. Your fractional CFO can advise you about which plan might be the most effective for your organization.
Assessment of Risks
You might understand the risks involved in creating software. You may even understand the many cyber risks that operating businesses in the virtual realm creates. However, that doesn’t mean you understand all the risks involved in a startup. Even the best SaaS startup fractional CFO will not understand all the risks your startup might experience. However, your CFO will understand most, if not all, of the financial risks and can help you assess your possible financial analysis needs and show you a path to mitigate them.
Assist in Securing Venture Debt
Perhaps the most compelling reason for many SaaS startups to consider a fractional CFO is for access to the advisor's resources when it comes to securing venture debt for the startup. While this need may be different at various stages of development, you will ultimately require venture debt–which works like a loan–to handle many business needs. Create the software, market the finished product, and handle countless other expenses along the way. Your fractional CFO can be a lifeline to your startup when it comes to securing this essential line, and so much more.
Do You Need a SaaS Startup Financial Advisor?
You’re going to need quite a few advisors along the road to success for your SaaS startup. A fractional CFO is simply one of the many professionals you’ll need to gather around you. In fact, you may consider your very own advisory board to help with many different knowledge gaps you encounter along the way. After all, you know software. That doesn’t mean you know about the legalities, financial matters, tax issues, zoning, and planning that building a successful SaaS startup requires.
Whether you’re well into the process and approaching a finished product or just beginning your journey, the odds are good that your SaaS startup can benefit from the services of a fractional CFO. You can find one by knowing where to begin your search. We can help. Contact 5th Line Capital today to learn more about the financial services we offer and how we can help with a SaaS startup fractional CFO.