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You Don’t Have to Raise Yet. Here’s What to Try First.

Written by David (DJ) Johnson
Financial Planning & Analysis•Growth Hub•

Runway math tends to feel fixed until you actually sit down and pull it apart.

A company with eleven months of cash left often assumes the only real lever is the size of the next raise. In practice, most startups have four or five smaller levers sitting in the model that nobody has touched, and pulling even two of them can turn eleven months into sixteen without changing a single thing about the fundraising environment.

Pricing is usually the fastest lever to pull because it doesn’t require cutting anything. A lot of early pricing gets set once, during the first few sales calls, and then never gets revisited even as the product adds features that customers are already using for free. Raising prices on new customers only, or introducing a higher tier for the accounts using the product the hardest, can add meaningful revenue within a single quarter without touching existing contracts or triggering churn. The startups that wait until a raise is close to fix pricing are usually leaving six figures of annual revenue sitting on a page nobody’s looked at in a year.

Headcount pacing is the harder lever, because it means telling a hiring manager no. Most headcount plans get built around an ideal team size and then get executed as fast as the budget allows, without much thought to sequencing. Delaying a hire by even one quarter, or filling a gap with a contractor instead of a full-time employee for six months, doesn’t cost the company its ambitions. It buys time to see whether the revenue that was supposed to justify the hire actually shows up first. A headcount plan that ties every hire to a specific revenue or usage trigger, instead of a calendar date, tends to stretch runway further than founders expect.

Vendor contracts are the lever founders forget exists. Most SaaS tools renew annually with automatic price increases built in, and most vendors will negotiate if you ask before the renewal date instead of after. Switching a handful of tools from monthly to annual billing in exchange for a discount, or consolidating three overlapping tools into one, can free up real cash without anyone on the team noticing a difference in how they work. This is the kind of savings that rarely shows up in a board deck because it feels too small to mention, even though it can be worth a full extra month of runway on its own.

Non-dilutive financing is the lever with the most nuance, because it isn’t free money and it isn’t always the right tool. Venture debt can extend runway without giving up equity, but it comes with covenants and a repayment schedule that has to be modeled honestly, not just added to the cash balance. Revenue-based financing works well for companies with predictable recurring revenue and gets expensive fast for companies without it. R&D tax credits are underused by startups that assume they don’t qualify, when many product and engineering teams doing standard feature work actually do. This lever exists to buy the extra runway that turns a rushed raise into one done on the company’s own timeline, not to replace a raise a company genuinely needs.

Each of these four levers is available months before a term sheet ever gets discussed, and none require raising a dollar to use. Startups that build them into the model as standard practice, rather than emergency options pulled out when cash gets tight, end up raising when it actually makes sense for the business instead of when the calendar forces the decision.

About the Author

David (DJ) Johnson

DJ is the Director of Rooled. His entrepreneurial journey started as an accountant for two Big Four accounting firms, then to managing rock bands for 10yr. Financial advising called him, and he built one of the first ever outsourced accounting firms.