Note: The full text of this blog post appears on the Forbes website. The version below has been edited for relevance to the Fidelity audience. For more of my thoughts, check out our website or connect with me on LinkedIn.

The process of raising equity for a company has a number of steps, many of which the CFO leads or is a part. It all depends on the stage and culture of your company. Sometimes the CFO is a participant, the manager of a process or the direct leader. There is no “right” role for the CFO in an equity raise, and a company can benefit from matching the talents of its CFO to the various different parts of the process.


Determining The Cash Amount Needed And The Narrative

The first step in any raise is to determine how much money you need and what you will spend it on. The CFO’s role here is critical, since there is a heavy amount of financial math involved to determine the cash needs. The CFO has to be able to answer two core questions: “how much money do we need and what do we plan to spend it on”?

Crucial in this step is explaining the narrative. The numbers need to support the story; they can’t be the story. This is where a CFO works with the founder or CEO in a support role. No matter how much of the process the chief executive and the board want the CFO to run, in the end, investors invest in the vision and leadership of the CEO/founder, not the financial savviness of the CFO.


Finding The Investors

Depending on the type of capital you are looking for, the CFO will either take an active leadership or managerial role. If you are looking for institutional investors, an experienced CFO can lean on their contacts to get meetings and rely on their reputation to get your foot in the door. Again, the CEO still needs to manage the pitch, but the CFO can facilitate many of the introductions.

An experienced CFO can be crucial to evaluating and determining the “right type” of investor. Some funds are looking for you to continue to raise money and grow at a breakneck pace. Other investors are looking for a quick “bump” in your stock price and can be expected to sell as soon as their reasonable return is locked in. None of these investors is bad per se, but it is crucial that you know your investors’ expectations before you take their money.

An important principle for a CFO to keep in mind is that while the investor is investing in the CEO, the time the CEO spends on finding investors takes him or her away from focusing on growing and managing the business. An active investment pitch is the time a company can least afford a downturn in performance, which often happens when a CEO is busy on investment roadshows.


Managing The Due Diligence Process

What to put in the “data room” to satisfy investor due diligence is part process and part art. At a basic level, the data should be easy to follow and back up the financial model and all parts of the pitch deck. The CFO should go through the model and the deck with a fine-tooth comb to ensure that all claims are backed up with data, and if there is contradictory data, have a very good explanation.

A good data room backs up all numbers without giving away company secrets. Even though a potential investor signed a non-disclosure agreement, you might not have the resources to pursue a lawsuit if they choose to violate the NDA. Some investors just want to see who your customer base is since they may be evaluating numerous companies in your space. The amount of data you make available is different if you are planning to sell your company versus raising capital.




Fidelity is built to make raising a round seamless for the entire management team. CFOs are necessary in the capital raise and at their best, provide guidance and structure to the process and comfort to investors that the company has fiscal responsibility. While investors invest in founders, CEOs and their management teams, a good CFO can shorten the time to raise capital, make sure the investors are the right fit, and get the best price and terms for the equity.

 Tags: Fundraising