Size the round and set milestones

Who this is for

Founder led lower-middle market companies with 5 to 50 million in annual revenue that need clarity on raise size and what it should achieve.

The quick answer

Plan for eighteen to twenty four months of runway in most cases. Tie the raise to a small set of value milestones such as revenue, margin, new capacity, or entry to a new market. Build base, upside, and downside cases and include a buffer for delays. Show a clear use of funds and the next funding options if needed.

The method in eight steps

Pick the runway target
Eighteen to twenty four months covers hiring cycles and sales cycles for most firms at this stage.
Name three value milestones
Examples include annual recurring revenue at a set level, gross margin at target, first plant or region live, or regulated approval in hand.
Build three cases
Base case you believe, upside case with stronger conversion, and downside case with slower wins or higher costs.
Write the use of funds
People, equipment, marketing, working capital, and contingency. Tie each item to a milestone.
Set hiring and build schedules
Map when roles start and when equipment or sites go live. Align cash draw to the plan.
Add a buffer
Include a modest buffer for delays and cost variance. Keep it visible rather than hiding it in lines.
Define the next step
State what the next funding option would be if needed. A larger facility, a term loan, or a small equity extension tied to hitting the milestones.
Publish the raise page
One page that shows runway, milestones and dates, use of funds, and cases. Use this to align your leadership team and outside partners.

Example

A firm raising to enter a new region set a twenty one month plan with milestones for first ten customers, gross margin at target, and a second shift live. The buffer and the three cases kept the board aligned when timelines moved by one quarter.

Pitfalls and fixes

Milestones that are activity based. Use outcomes such as revenue or margin.
No buffer for delays. Add a visible buffer.
Hiring plans that start too early. Phase to match learning and demand.

Checklist

Runway target
Three value milestones
Three case model
Use of funds tied to milestones
Buffer line
One page raise summary