How Biotech Businesses Are Leveraging Fractional CFO Services

Biotech companies operate in a financial reality that would terrify most business owners. They spend millions before earning a single dollar of revenue, which is counterintuitive to many. Clinical trials can drag on for years with no guarantee of success, and one regulatory rejection can erase a decade of work overnight. That’s why Fractional CFO services are perfect for biotech businesses, so they have access to expert financial guidance without draining their precious capital on a six-figure executive salary.

Why Biotech Companies Need Specialized Financial Leadership

Running a biotech company isn’t for the faint of heart. Leadership must manage money in ways that defy conventional business logic, as biotech companies have to wait many years before generating revenue.

This creates a few unique financial challenges:

• The business could burn through cash for years with zero revenue to show for it
• You must structure funding around scientific milestones instead of sales targets
• It’s hard to value intellectual property that hasn’t proven itself yet
• Regulations change all the time and can affect how soon you get your product to market

What Fractional CFOs Can Do for Biotech Companies

Fundraising and managing finances takes a massive amount of time and energy for biotech founders. Series A, B, C, and D rounds stack up as companies progress through discovery and clinical trials. Each round requires financial models that show investors exactly how their capital is helping create a marketable product. 

Here’s what financial CFOs can do to support biotech companies:

• Financial modeling for fundraising: Fractional CFOs build investor-ready models from the ground up. They know how to project burn rates across different trial scenarios and calculate runway under multiple funding amounts. They then present this information in formats that venture capitalists expect to nail any pitch meeting.
• Cash management and runway extension: Every unnecessary cost threatens survival when monthly expenses hit $500,000 or more with no revenue coming in. Fractional CFOs will scrutinize vendor contracts and find savings that can extend your cash runway by months.
• Board reporting and investor communications: Biotech boards include industry veterans and seasoned investors who want clear financial updates. Many biotech founders come from a science background, which means that creating financial reports can be a completely foreign concept to them. A fractional CFO prepares these reports so you can answer to your stakeholders with confidence. 
• Grant application support: Federal grants always have excruciatingly detailed reporting requirements. To win one of these grants, you must present detailed budgets with justifications for every expense. Reviewers scrutinize these numbers carefully, and a CFO with grant funding experience knows what evaluators look for and how to present costs in ways they understand.

Partner with CFO Hub

At CFO Hub, we work with biotech companies at every development stage, from early discovery through commercialization. Our fractional CFO team understands the unique pressures biotech founders face and brings invaluable financial experience that can make the difference between a successful product launch and no launch at all. Contact us today to see how fractional CFO services can strengthen your biotech company’s finances.