Understanding Fractional CFO
Fractional CFOs is a relatively new concept in the business world. Fractional means that you own part of a company, and not all of it. You may be looking at this thinking “What does fractional CFO mean?” Well, it’s actually pretty simple! One way to think about it is like when you buy gas for your car. The price per gallon will depend on how much fuel you need, but the total cost will be the same regardless of if you fill up with 20 gallons or 10 gallons.
There are two main ways to invest in a company using fractional CFOs. The first is the traditional way of investing with stocks, which you may have heard about before. This means that you buy shares from companies and when they do well, your value goes up as well. You’ll have some input into the company’s decisions by voting on things like new projects or major changes at the annual meeting- but ultimately those decisions are left for management to make based on what they believe will be most profitable for shareholders.
The second type of investment strategy is called “equity crowdfunding” and it involves buying equity stakes in start-up businesses through online platforms such as AngelList, PeerStreet, FundersClub, and MicroVentures. This way you can become a part-owner in the company and have a voice on how it’s run.
You also can invest with crowdfunding sites like Kickstarter or Indiegogo to support projects you care about, more so than just giving money. This is advantageous because if people are excitedly backing an idea or product they believe in there’s a better chance for success at getting funded!
This type of investment strategy has come into play as many companies grow too large for equity investing meaning that start-ups now represent one of the best opportunities for investors looking to get involved early rather than playing catch up later down the line when those companies go public. However, this does mean having some nerves of steel while waiting months or years until the company becomes public and generates revenue.
Some people might find this type of investment too risky for them but it is a great way to diversify your portfolio, and with the recent growth in crowdfunding there are now many projects seeking funding that you can invest in if you have extra cash or want to make some quick money!