Financial Planning for High-Growth Startups
Most startups don't fail because of bad products; they fail because they run out of cash. Understanding your Burn Rate and Runway is not optional—it is survival.
Key Metrics Defined
- Gross Burn: Total monthly expenses.
- Net Burn: Expenses minus Revenue. This determines your true runway.
- Runway: How many months you can survive before hitting $0 balance. Investors typically look for 18+ months after a funding round.
Cap Table Strategy
Your capitalization table tells the story of your company's ownership. Early mistakes here are expensive to fix later.
- Founder Split: Discuss roles and contributions early. 50/50 isn't always fair.
- Option Pool: Reserve 10-20% for early employees. This usually comes out of the founder's stake *before* investors put money in.
- Dilution: Expect to give up 20-25% of the company in each major funding round (Seed, Series A).