Hiring a CFO then seems like a logical expansion of the management team. This CFO takes over the administrative processes from the CEO while also addressing strategic financing issues.

A common question that arises is: “When do I ‘really’ need this?” Budget often plays a major role. A CFO who focuses on financial administration as well as liaising with shareholders and securing financing spends a great deal of time on these tasks. This usually has a massive impact on the budget.

F.INSTITUTE therefore believes there is a better alternative, one in which the CFO can focus on strategic financial issues and steering the company toward milestones. In this article, we’ll explore what it takes to effectively fulfill the CFO role in a life sciences company.

What kind of CFO does a Life Sciences company need?

What we see in practice is that many CFOs with an accounting background are naturally internally focused. Approving payments, ensuring the reporting structure is in order, and monitoring costs.

The accountant who records what has happened, the controller who ensures the books are accurate and the company is compliant. For a life sciences startup in a competitive funding landscape, that internal focus is often insufficient.

Because there’s a fundamental difference between keeping track of finances and steering the business based on them. We believe that, with good reporting, the CFO can focus on a different set of questions:

• What milestones do we need to achieve to justify the next funding round?

• What type of investor aligns with our exit potential?

• How do we structure equity compensation without damaging the cap table?

• How does a six-month delay in our CRO affect our runway?

• How do I steer the organization toward that goal, and what scenarios are in place if the timeline shifts?

In Life Sciences, these questions arise sooner and more frequently than founders typically expect. Shortly after raising the first pre-seed or seed funding and grants, the company already embarks on a journey where progress is key to attracting follow-on funding.

A CFO with industry expertise in Life Sciences is essential

These dynamics are characteristic of the sector. Typically, you see long development timelines, a complex funding mix of grants, equity, and debt, multiple outsourced processes running simultaneously, and milestone-driven reporting to investors. Together, they create a level of financial complexity that basic accounting alone cannot handle.

After all, in a biotech company simultaneously running a clinical program, a CMC process, and a regulatory process, granularity is essential to maintaining insight into the business. A delay in a single workflow has direct consequences for the company’s runway and the timing of the next funding round.

The CFO must therefore not only be able to model but also to tell the story. To investors who understand the dynamics of biotech development timelines, to grant providers with specific documentation requirements, and to a board that wants to make decisions based on sound information. Because only when the CFO understands the science and clinical relevance can he bridge the gap to the financial strategy.

“With a bank, you have to spend a long time explaining why you won’t have any revenue in the first few years,” says Willem Mees van der Bijl, CEO of Spatium Medical, a medtech spin-off from Erasmus MC. “With a CFO who knows the sector, that’s not necessary. They’ve been through it before.”

A unique perspective on the CFO role in Life Sciences

That’s why, at F.INSTITUTE, we’ve been working differently for ten years now. We’ve found that a different approach is much better suited to startups and scale-ups in Life Sciences. Specifically, separating financial administration and reporting from corporate finance activities such as financing, investor relations, and scenario planning.

First and foremost, we offer a fractional CFO with in-depth industry knowledge: a part-time CFO who focuses entirely on corporate finance activities in Life Sciences that require a high level of expertise. After all, a full-time CFO at the level required by Life Sciences companies costs between €150,000 and €200,000 per year. And for a seed-stage company, that’s rarely the right choice.

This role includes financial modeling and scenario planning, investor reporting and board representation, cap table management, term sheet analysis, and grant compliance for WBSO, EIC, and Horizon Europe. It also includes guidance on equity-based compensation, ranging from options to stock appreciation rights (SAR).

We offer operational finance services such as a reliable monthly reporting cycle, a rolling cash flow forecast, and a financial model that tracks budget versus actual expenses by activity, through a support team. We offer both roles, but they are separate from one another.

When should you hire a fractional CFO?

There’s no single “right” time, but the need often becomes clear quickly in certain situations. The most common triggers:

• Preparing for a funding round exceeding €1 million, where financial modeling, process management, and investor documentation become indispensable.

• When the board or existing investors ask questions that the founding team cannot answer immediately.

• When multiple external parties are working simultaneously and budget management per workflow is difficult to keep track of.

• When the founder’s time is consistently consumed by financial administration instead of the work that only they can do.

A fractional arrangement provides the same strategic capacity for a fraction of the fixed costs, with the ability to scale the involvement up or down.

The CFO role already exists, the question is how to fill it

The CFO role exists in every life sciences company, whether it is formally staffed or not. The question is whether the timing and scope of that role align with the company’s actual complexity.

For most Life Sciences and MedTech companies between Seed and Series B, a fractional CFO with industry experience, supported by structured planning and control, offers the most effective path between financial administration and the strategic financial leadership that a growing company needs.

A fractional CFO for Your Life Sciences Company?

If you’d like to explore this topic further and discover what F.INSTITUTE can do for your organization, please contact us. We’d be happy to discuss your goals.