Raise against a plan, not a round label.
A funding target begins with the resources required to reach a meaningful milestone. The runway budget covers recurring net cash consumption. One-off investments and a closing reserve account for cash needs that the monthly average misses.
Subtract current cash to estimate external capital required. This is a planning baseline. A hiring schedule, collection forecast and downside scenario will give a more useful range than a single number.
The formula, made clear.
- Monthly net burn
- Expected cash consumption after customer collections.
- Closing reserve
- A cash cushion left after the planned operating period.
Put the numbers in context.
$75,000.00 monthly burn for 24 months, plus $200,000.00 of one-off costs and $150,000.00 in reserve, less $400,000.00 current cash, implies a $1.75M raise.
| Input | Example value |
|---|---|
| Monthly net burn | $75,000.00 |
| Target runway | 24 months |
| One-off investment | $200,000.00 |
| Closing cash reserve | $150,000.00 |
| Current available cash | $400,000.00 |
| Estimated capital required | $1,750,000.00 |
What this calculation assumes
Constant monthly burn. Financing fees, contingent liabilities and changes in working capital are excluded unless included in your inputs.
What to consider next.
Test the dilution associated with this raise. Consider whether the planned milestones are credible within the funded period.
How we approach financial models →