In recent years I had the chance to talk with many entrepreneurs, both as an investor and an entrepreneur. As often happens nowadays, the conversation usually shifts to fundraising, cash burn management, and runaway.

Many venture capital funds have a rule of thumb saying that the raised funds should suffice for 24 months, and some even go as far as 30 months. I *kind* of agree, but my advice is to bear in mind that this is

only a rule of thumb and not holy scripture.

The founders (and the investors, if there are any) need to agree on the next company goal that will place it in a good position (be it additional fundraising or profitability). The goal can be incomes, number of users, partnerships, etc. depending on the type of company and GTM, but all parties need to agree on it. Once the goal is set, it is possible to make the relevant calculations and to build a budget that will bring the company to that goal.

The budget determines the fundraising sum according to the “Goldilocks principle” (yes, the girl from the children's story about the three bears). This is especially important when determining the Goldilocks Zone - you can raise more funds or less funds based on considerations such as valuation, market status, and quality of investors, but if you deviate significantly, it will be harder for you to survive and thrive.

Many would say - why not raise significantly more funds than the budget if we can? You need to remember that fundraising affects the behavior of the company. Once you raise funds far beyond the budget, you are more likely to exceed it and burn cash. There is a fear that you will recruit a lot more people than you actually need and a year later you will discover that you are behind your goals and you will need to tighten the belt, which is the opposite of being hunky-dory. If you don't raise enough funds, you will depend heavily on the market conditions and on immaculate execution of your plans (which rarely happens).

I experienced this in 2008 and I don't wish anyone the ordeal of seeing revenues and signed contracts disappearing, and having investors who were willing to take a gamble during a period of crisis evaporate just when you need them the most.

Having to fire a significant part of the company because there is no money for salaries and having to cut salaries for the rest is an especially painful experience.

Your ability to build a budget is instrumental in avoiding such difficult situations, or at least, considerably lowering the risk. Nothing can replace experience when it comes to this.  If  this  is  your  first  time   planning   a  budget,  don't  try  doing  it  alone.  Hire  a professional who has witnessed dozens of start-ups, consult other more seasoned founders, and remember that many clichés carry more than a grain of truth.

* Not everything is under your control - global crisis periods might slow down progress for months or even years

* In most stages of company development, there are more questions than answers.

Leave considerable margins of error for making changes and getting out from local failures. It is important to remember that at least one, and sometimes all, of the following will occur:

• Building the (right) product will take longer than planned

• Hiring employees will take longer than planned

• Employee onboarding will take longer than planned - especially sales people

• Identifying your customers and finding the PMF will take longer than planned

• Correct pricing will take longer than planned

• Fundraising will take longer than planned

*There are things that my partners and I always forget when making a budget such as flights, company activities, hiring costs, administrative functions, and so on - even what you don't plan for has an affect, so you need to bear in mind that there will be quite a

few unexpected expenses and try to find ways to limit other expenses in order to avoid exceeding the budget.

On the other hand, sometimes everything goes according to plan or even better than planned (this happened to us at our previous company - Demisto). In this case, don't be afraid to change plans, to start fundraising earlier, and to advance faster than planned.

Be attentive to what is happening in the real world and remember that this is the advantage of being a start-up - the ability to move quickly and change plans.

In any case, it is very important to update both investors and employees in real-time and not to suddenly drop changes on them during a quarterly board meeting or a gathering of the entire company. The same applies to good news (“our revenues are bigger than our goals”) - such news lift everybody's spirits - but also to disappointments - it is always better to be in control even when bad news need to be delivered. In my experience, both good investors and employees are willing to go out of their way even during hardships, if we as mangers act with transparency.

During good macro periods, it is quite possible that venture capital funds will request you to go preemptive even if you still haven't reached the fundraising goals that you set for yourselves. I recommend that you consider these requests seriously, based on the quality of the funds. You never know how long the good times will last. Such an event is an opportunity to reconsider the budget and goals in order to capitalize on opportunities, but as stated earlier, it is better not to go over your head but instead plan based on achievable goals.

To conclude, don't regard the length of the runway and the budget as technical and dreary issues. Despite having many things in common, each company is unique in its own way, and its considerations affect the budget and fundraising. Correct budget management and alertness to changes can make the journey much easier, and, with a bit of luck, even more enjoyable.