How to Build Your Startup Finance Function at Every Stage
Finance in a startup often begins as a side task. Founders manage bank accounts, track spending in spreadsheets, and maybe reconcile QuickBooks at the end of each month. It works, until it doesn’t. As the business grows, financial needs evolve quickly. Knowing when and how to level up your finance function can reduce risk, support smarter decisions, and make you far more prepared for fundraising.
Here’s a look at how to scale your finance capabilities alongside your company, from pre-seed through Series B and beyond.
Pre-Seed to Seed: Keeping It Lean but Accurate
In the earliest stages, financial processes are typically managed by the founding team. A basic setup often includes a business bank account, monthly bookkeeping, and a spreadsheet-based forecast.
When to bring in help:
Bookkeeper (part-time): When managing QuickBooks or Xero starts taking too much time or when you want clean books to share with investors.
Fractional finance support or consultant: If you're raising a round and need a solid forecast or cap table model, it’s often better to bring in someone who’s done it before.
This is also the time to begin separating operational accounting from forward-looking planning. Even if it’s just a spreadsheet, building a simple forecast helps you think more proactively about burn and milestones.
Even in the early days, building good documentation habits pays off. Keeping monthly financials saved and organized, noting key assumptions in your forecast, and separating personal from business expenses all make it easier to scale later. These foundational habits often get overlooked but are key when outside parties (like accountants or investors) begin reviewing your numbers.
Seed to Series A: Adding Structure and Insight
With more funding, a team taking shape, and regular investor updates required, financial accuracy becomes more important. This is where many companies move beyond ad hoc finance support.
What often gets added:
Fractional Controller or Finance Manager: To manage books, payroll, compliance, and recurring reporting.
Basic reporting cadence: Monthly budget vs actuals, cash forecast, early KPI dashboards.
You may not need a full-time hire yet, but someone needs to own the numbers. Investors will expect clean financials, board-ready reporting, and thoughtful plans around headcount and runway.
As you prepare for diligence or regular investor updates, you may need to formalize how you track KPIs. Basic reporting tools like Mosaic or Pry can help structure your forecast, support better scenario planning, and demonstrate investor-readiness without heavy implementation costs. At this stage, the focus should be on reliability, not bells and whistles.
Series A to Series B: Building the Internal Team
At this point, finance needs are too complex for fractional roles alone. A real internal function begins to take shape.
Typical hires:
Head of Finance / Director of Finance: Oversees budgeting, forecasting, board prep, scenario planning.
Finance Analyst: Supports revenue modeling, hiring plans, and SaaS metrics.
Controller (or senior accountant): Owns monthly close, audit prep, accounting system oversight.
If you’re looking to mature your business, improve visibility, or prepare for scale, this is where you need hands-on professionals who can build systems, not just manage spreadsheets.
One key unlock at this stage is partnering finance with other departments. Your finance lead should be working with sales to model pipeline impact, with marketing on CAC assumptions, and with HR to plan headcount. These partnerships shift finance from being reactive to truly strategic—connecting inputs across the business to outcomes.
Series B and Beyond: Strategic Finance as a Growth Engine
With a larger team, more stakeholders, and bigger targets, strategic finance becomes critical to execution.
What shifts:
CFO joins (or is promoted): Owns financial strategy, long-range planning, M&A, fundraising, and investor relations.
System upgrades: Implementing ERP, FP&A tools (like Mosaic or Planful), and business intelligence platforms.
The CFO is no longer just “head of reporting.” They’re a key voice in company strategy—balancing growth, margin, and resource allocation.
Common Mistakes Founders Make
Hiring too senior, too early: A CFO isn’t always the first hire. Often, a strong controller or finance lead is a better initial fit.
Overreliance on spreadsheets: At some point, Excel becomes a bottleneck. Upgrading tools can improve accuracy and reduce risk.
Blending strategic and operational finance: Bookkeeping and fundraising require different skill sets. Recognize when it’s time to split them.
Not separating cash and accrual views: Relying only on bank balances can obscure your actual burn. Accrual-based reporting gives a more accurate picture of how your business is performing month to month.
Conclusion
A startup’s finance function doesn’t need to be built all at once, but it does need to evolve intentionally. What starts as a few spreadsheets eventually becomes a core business function that informs every major decision. Layering in the right people, tools, and structure at the right time can help avoid surprises, reduce investor friction, and support a more scalable business.
If your team is approaching its next stage of growth and you are unsure when or how to make your first finance hire, I am always happy to offer guidance. Feel free to reach out to discuss what might make sense for your business.
