The CEO is the face of the company and often the one responsible for fundraising. But having a virtual CFO behind the scenes can help reduce the stress of raising capital. Your company’s vCFO can help you determine the best type of financing, facilitate connections with banks and investors, and be there for you throughout the due diligence process.
Thanks to your relationship with your company’s vCFO, raising capital becomes less of a burden.
Debt vs. Equity Funding: A vCFO Helps You Decide
Every business needs financing. The primary question is, which type of funding is the most appropriate for your company at its current stage?
Generally speaking, you have two options: debt financing, such as loans from a bank, and equity financing, such as capital received from venture capitalists. Each option has its benefits and potential drawbacks for the future of your company.
A vCFO Helps You Figure Out the Story
Your company’s vCFO works with the CEO to help discover the “why” behind fundraising. This is a multipart process. First, the vCFO can help you determine how much your company needs to raise. Next, they work with you to decide how to spend the money.
The last phase is to create a narrative, or story, around your funding needs. How will spending the money you raise help you achieve your mission? While the CEO will present the narrative to potential investors or lenders, the CFO is usually responsible for putting the narrative together behind the scenes.
A vCFO Connects You to Investors
When raising capital, it’s often who you know that makes the difference. Your vCFO can manage connecting to investors, by introducing you to those in their network and facilitating the conversation. Your vCFO can also introduce you to banks or help you negotiate through the lending process.
Along with making the introductions, your vCFO can help you determine which type of investor is a good match for your company’s needs. Some investors may be particularly interested in high-growth companies. If a vCFO suspects your company will grow more slowly or sustainably, they may recommend making other connections. Depending on your company’s needs, a vCFO can recommend you connect with investors who will form long-lasting partnerships with your company or those who will invest, then sell their share of the company once they’ve made a profit.
A vCFO Assists With Due Diligence
Investors will require a due diligence process before they finance your company. Your vCFO will review your company’s data and pitch closely to ensure everything is in order and avoid potential concerns or questions. They’ll also help you determine what information to share with investors, so you don’t reveal any company secrets before the ink is dry.
Whether you’re raising capital or need support with the day-to-day operations of your company, New Direction Capital’s vCFOs can support you in your role as CEO. Contact us today to learn more.