INSIGHTS / News

For an early-stage business, bringing in senior expertise can be a balancing act. Specialist knowledge may be essential at a pivotal moment, but a full-time leadership hire can be difficult to justify before the company has the scale or budget to support it. Fractional leadership offers an alternative: access to experienced professionals without committing to a permanent role.

That was the focus of the latest SETsquared Innovation Insights session, Fractional Hiring: Lessons from both sides of the table. Hosted by Serena Giaminardi, Head of Programmes and Investment at SETsquared, the discussion brought together Caroline Phillips, Co-Founder of Enki; Jan Binon, Founder of Ariadnic; and Toby Venning, Founder and CEO of Cross Digital and Elate. Drawing on their experiences, the panel explored what fractional leadership can offer, where challenges can arise, and what founders and fractional professionals need to get right to make the relationship work.

Expertise when the business needs it

Fractional leadership can often be described as part-time work, but its value goes beyond the number of hours involved. Caroline Phillips explained: “It’s your ability to bring in really specialist expertise at a commitment level and price point that works for you.” For a growing business, this might include strategic guidance at a critical stage, practical support with a funding process or specialist knowledge that the founding team has not yet had the chance to build in-house.

Toby Venning highlighted how this worked at Elate. As the company prepared to secure its third Innovate UK grant, bringing its total awards to £508,081 across projects worth £664,388, the increasing demands of cash flow management and due diligence made stronger financial expertise essential. A fractional CFO helped strengthen the business’s financial capability and give funders confidence, without the cost of a full-time appointment. Just as importantly, Elate needed someone who could support its longer-term ambitions: “We wanted someone who really shared our values and could help us in the long term as we developed our health tech product.”

Jan Binon added that the right time to bring in financial expertise depends on the sector and the stage of the business. In biotech, more intensive support may become critical around clinical trials, when risk management becomes increasingly complex, or following a significant funding round. In medtech and industrial biotech, however, financial expertise can add value much earlier: “I believe you should get support as soon as possible. You’re going to market much quicker so you need someone who can clearly articulate your business plan.”

The lesson for founders is to identify where specialist input will make the greatest difference, rather than waiting until a skills gap becomes a problem. Fractional leadership can help businesses strengthen their financial foundations, navigate funding milestones and prepare for the challenges of growth.

Start with the gap, not the job title

Before looking for a fractional CFO, finance director or another senior specialist, founders need to understand the problem they are trying to solve. Caroline Phillips emphasised the importance of focusing on capability rather than titles: “focus on the skills as opposed to the job title.” An outsourced accountant and a fractional CFO may both work on a company’s finances, but their responsibilities and strategic contributions can be very different. Equally, a senior-sounding title does not automatically demonstrate experience of operating at board level, raising investment or helping a business navigate a similar stage of growth.

For founders, this means taking an honest look at the team’s existing strengths, the capabilities it lacks and the business’s longer-term ambitions. What decisions need to be made? Which milestones are approaching? Where would experienced external input have the greatest impact?

The answers will help determine whether the business needs support with a specific task, such as preparing for investment, or a longer-term relationship that develops as the company grows. Getting the foundations right early can also help founders avoid bringing in expertise reactively, when time and resources are already under pressure.

Investment readiness is a good example. A financial plan and a well-organised data room are important, but neither replaces a clear strategy. As Jan Binon explained: “I believe that you’re investment ready when you have that story laid out. You need to know what your exit looks like. What are the steps to get you there?” Founders need to articulate where the business is going, the milestones that will move it forward and the funding required at each stage. The financial information should support that strategy, demonstrating how the business will deliver its plans and building a credible case for investors.

A fractional leader can help develop this picture, but the founder must remain clear about the direction of the business and the outcomes they want to achieve.

Trust is part of the hire

Once the skills gap is clear, finding the right person takes more than accepting a recommendation or choosing the first candidate who looks suitable on paper. Caroline Phillips encouraged founders to broaden their search and approach the process with the same care they would apply to a permanent appointment: “You don’t just take one recommendation from someone in your network and go with it. Meet a few different people, ask questions, and take references as you would with a permanent employee.” Relevant sector experience also matters. Someone who understands the market, its risks, potential investors and the practical challenges facing a founder may be better placed to provide useful advice from the outset.

“Make sure they’ve got the right expertise in your industry, challenge them, and try and garner some insight into how they might go about the problem you’re trying to solve,” Toby Venning advised.

The working relationship matters just as much as technical expertise. A fractional leader may advise on sensitive decisions and, in a finance role, help protect the long-term health of the business. Founders need to feel comfortable asking questions, challenging recommendations and discussing changing priorities openly.

The panel also explored whether fractional hiring could widen access to talent. Because it does not require a full-time commitment, it can create opportunities for experienced professionals balancing work with personal responsibilities or looking to build experience across several businesses. It can also give start-ups access to a broader range of perspectives than they might otherwise be able to afford.

However, greater flexibility does not automatically mean greater diversity. Founders still need to be alert to unconscious bias and avoid relying exclusively on familiar networks when searching for candidates.

Equity can align interests, but it comes with risk

For a cash-constrained start-up, offering equity alongside a fee can help secure specialist expertise while giving a fractional professional a stake in the company’s longer-term success. But founders need to weigh that potential benefit against dilution, the value of the contribution, and what happens if the working relationship ends earlier than expected.

Toby Venning described an arrangement that combined cash with equity. “We wanted someone with skin in the game who would build a long-term partnership with us,” he reflected.

However, he also highlighted the risks of agreeing to equity without adequate protections: “We were fortunate. If you give away too much equity, there is no guarantee that person will remain invested for the long term. We did not have shareholder agreements, bad-leaver clauses or other legal protections in place for either party – we got very lucky.”

The experience illustrates an important point for founders: equity can create a sense of shared purpose, but it does not guarantee a lasting commitment. Without clear terms, both parties may be exposed if circumstances change.

Caroline Phillips noted that many fractional CFOs will consider equity alongside a cash fee or retainer, but would not take a role based on equity alone: “Most of the CFOs in our community would not take a role purely for equity. They’ve all got bills to pay, charges, families to support. I think having a small equity element alongside a day rate or a retainer is a great option; it ties that CFO to the long-term outcome of your business.”

There is no single payment model that suits every business. Founders should agree expectations from the outset and seek appropriate legal, tax and financial advice before offering equity. Any arrangement should clearly address responsibilities, payment, vesting where applicable, shareholder rights and what happens if either party decides to leave.

The aim is to create a fair agreement that reflects the value of the contribution without placing unnecessary pressure on the business’s future ownership or the professional’s financial security.

Clear boundaries make stronger partnerships

Even highly experienced fractional leaders need to be integrated into the business effectively. Agree on priorities, schedule regular meetings and clarify decision-making responsibilities. Founders should also establish how much time is available, how quickly the individual can respond and which decisions they can make independently. In return, fractional professionals need clarity about the business’s priorities and the support available from the founding team. These arrangements help prevent misunderstandings, particularly when a fractional professional is balancing commitments across several clients.

Caroline Phillips highlighted the importance of addressing difficult questions early rather than allowing assumptions to develop. As the business evolves, the expectations may need to change. A role that meets the company’s needs at pre-seed stage may no longer provide the right level of support as it approaches a larger funding round or prepares to scale.

Regular reviews can help both sides assess whether the relationship is delivering the expected value, whether priorities have shifted and whether additional or different expertise is needed. A clear contract, including notice arrangements for both parties, provides a framework for adapting or ending the relationship if it is no longer the right fit.

The panel also stressed that fractional leadership should not automatically be viewed as a pathway to a full-time role. Instead, founders should focus on making the arrangement effective on its own terms, including transferring knowledge to the wider team where appropriate.

Over time, a combination of specialist fractional expertise and generalist full-time support can help a growing company develop the capabilities it needs without expanding its permanent team prematurely.

A partnership, not a shortcut

Fractional hiring works best when founders understand what their business needs, what they can afford and where specialist expertise will make the greatest difference.

For innovative businesses navigating funding, product development and growth, fractional leadership can provide access to senior expertise without the immediate commitment of a permanent hire. The key is to treat the arrangement as a genuine partnership, built on clear expectations, mutual trust and a shared understanding of what success looks like.