The most common mistake founders make with fundraising is starting too late. By the time runway drops below six months, your negotiating position is weak and your options are narrow. Here's how to think about timing your raise.
The fundraising math
A seed or Series A round typically takes 3–6 months from first meeting to term sheet, and another 4–8 weeks to close and receive the money. Under an optimistic scenario, you need 4–5 months of runway just to run the process. Under realistic conditions, 6–8 months.
Rule of thumb: start your fundraise when you have 12 months of runway left.
This gives you: - 6 months to run the fundraising process (meetings, follow-ups, negotiations) - 6 months of buffer if the process takes longer than expected - The psychological position to walk away from bad terms
What burn rate signals to investors
Investors look at burn rate not just as a survival clock, but as a signal of capital efficiency. High burn relative to revenue growth is a yellow flag. High burn with strong MRR growth and clear payback period is acceptable.
Key metrics investors want before a Series A: - Monthly burn clearly explained and controllable - Path to profitability or next fundraise milestones visible - Burn multiple < 2x (i.e., you're burning no more than $2 for every $1 of net new ARR)
Default Alive vs. Default Dead
Paul Graham's "Default Alive or Default Dead" framework asks: at your current growth rate and burn rate, will you reach profitability before running out of cash — without raising?
If yes: you're default alive. Fundraising is optional and you negotiate from strength. If no: you're default dead. Every month you don't raise increases the existential risk.
Use the runway calculator above with your monthly revenue growth rate to see your default alive / default dead status.