Three Numbers Every Founder Should Know Before Raising

Most founders prepare for a raise by polishing the deck. Investors, meanwhile, are doing something quieter: they are reaching for three numbers to decide whether the story holds together. Get these wrong, or worse, not know them, and the narrative stops mattering.

They also move fast. DocSend’s data shows investors spend only around two and a half minutes on a pitch deck on average, and the financials are among the slides they dwell on longest. You have minutes, not hours, to make a handful of numbers add up.

Here is the uncomfortable truth about early meetings. An investor may spend twenty minutes with you and a fraction of that on your deck. In that time they are not grading your design. They are testing one thing: does this founder understand how their own business makes money? Three numbers answer that question faster than any slide. A founder who can state them without reaching for a laptop signals control. A founder who fumbles them signals the opposite, no matter how polished the story around them.

This piece walks through each number: what it is, how to calculate it honestly, the trap that catches founders who only half-know it, and how the three connect into a story an investor can back.

Why investors reduce your business to three numbers

Investors see hundreds of decks a year and back a handful. They cannot become an expert in every business, so they lean on a small set of figures that travel across industries. Those figures compress your whole company into a single question: if I put money in, does more money come out, and how reliably?

The three numbers below answer that in sequence. The first tells them how much time your cash buys. The second tells them whether the underlying business actually works. The third tells them whether growth compounds or just burns. Miss any one and the picture is incomplete.

They also serve as a proxy for something investors cannot measure directly: your judgement. Numbers you can explain clearly are numbers you manage. The reverse is just as true.

1. Your monthly burn, and the runway it buys

Burn is the cash your business consumes each month after revenue. Runway is how many months of it you have left in the bank. This is the first thing a serious investor works out, because it tells them how much leverage you have in the negotiation.

Calculate it honestly:

• Net burn = cash out minus cash in, averaged over your last three months, not your best month.
• Runway = available cash in the bank divided by net burn.

“Available cash” matters. It does not include money customers owe you but have not paid, and it does not include a credit line you are hoping to draw. Investors will make that distinction even if you do not.

If you are raising with three months of runway, you are not raising, you are being rescued, and the terms will say so. Raising from a position of six months or less quietly hands leverage to the other side of the table, because they know the clock is against you. Runway is not just a survival number; it is a negotiating position.

The trap: quoting gross burn (total spend) when the investor means net burn (spend after revenue), or using a single flattering month. Both make your runway look different from reality, and the correction happens in front of them.

There is also a currency dimension that founders raising in a volatile economy forget. If your costs are partly in dollars, for hosting, imported inputs or a foreign hire, and your revenue is in naira, your burn is not fixed. A currency move can raise your real burn without a single new expense. Model your runway at today’s rate and at a weaker one, and know both.

2. Gross margin, not just revenue

Revenue tells an investor how big the top line is. Gross margin tells them whether the business underneath it actually works.

Gross margin = (revenue minus cost of goods sold) divided by revenue. Cost of goods sold is only the cost of delivering what you sold: hosting and payment fees for a software product, ingredients and packaging for a physical one, the direct cost of the people delivering a service. It is not your whole cost base. Rent, salaries for your core team and marketing sit below the gross margin line, in operating costs.

A company growing revenue at 15 percent a month on 20 percent margins is often in more trouble than a slower business at 70 percent. The fast one is buying revenue that barely covers its own delivery, so every new sale adds work without adding much cash. Investors have watched that pattern end badly enough times to look for it early.

Margins also tell a story about pricing power and defensibility. A healthy, stable margin suggests customers pay for the value, not just the lowest price. A thin or falling margin suggests you are competing on price, which is the hardest position to fund.

Be ready to explain three things: what sits in your cost of sales, why the margin is what it is, and where it goes as you scale. “It is 55 percent today, and it climbs toward 65 as we renegotiate our supplier contract at volume” is a credible answer. A number with no story behind it is not.

3. The unit that repeats

Every fundable business has a unit that repeats: a customer, a subscription, a transaction. Investors want two numbers about it.

• CAC (customer acquisition cost) = total sales and marketing spend in a period, divided by the number of new customers won in that period. Include the salaries and commissions of the people doing the selling. Leaving those out is the most common way founders understate CAC and mislead themselves.
• LTV (lifetime value) = the gross profit a customer generates over the whole time they stay with you. Note gross profit, not revenue: a customer who pays a lot but costs a lot to serve is worth less than the headline suggests.

When lifetime value comfortably clears the cost to acquire, you have a machine worth funding. A common rule of thumb is an LTV to CAC ratio of 3 to 1 or better. When it does not clear, more funding just makes the losses bigger, faster.

There is a third figure investors increasingly ask for alongside these: the CAC payback period, the number of months of a customer paying before you earn back what it cost to win them. Under twelve months is comfortable for most small businesses. A long payback ties up cash you may not have while you wait to recover it, which matters enormously when capital is scarce.

A worked example

Take a small B2B software business, with figures in naira for realism:

• Cash in bank: 18,000,000. Net burn: 3,000,000 a month. Runway = 6 months.
• Monthly revenue 5,000,000, cost to serve 1,500,000. Gross margin = 70 percent.
• Last quarter it spent 4,500,000 on sales and won 30 customers, so CAC = 150,000. Each customer pays 40,000 a month at 70 percent margin and stays 30 months, so LTV = 40,000 x 0.70 x 30 = 840,000. LTV to CAC is 5.6 to 1, and at 28,000 of monthly gross profit per customer, CAC pays back in a little over five months.

Now the founder walks in able to say: six months of runway, seventy percent margins, and every 150,000 spent on acquisition returns 840,000 and pays back in five months. That is a fundable story, told in three numbers, and every figure traces to something the founder controls.

Notice what the example also reveals. Six months of runway is tight; this founder should be raising now or extending runway first, not in three months. The numbers do not only sell the business, they tell you when to act.

The most common mistakes

• Quoting revenue as if it were profit. “We did 10 million last month” means little without the margin beside it. Investors will ask what was left after the cost of delivering that revenue.
• Understating CAC. Counting only ad spend and ignoring the salaries of the people who close deals makes acquisition look cheaper than it is, and the model built on it collapses under scrutiny.
• A single flattering month. One large payment can make a burning business look healthy. Averages, not peaks.
• Not knowing the number live. The damage is rarely the number itself; it is reaching for a laptop to find it. If you cannot recall it, the investor assumes you do not manage it.

What to do this week

• Pull your last three months of actuals and calculate real net burn, not budgeted burn. Write down the date the cash runs out.
• Split your profit and loss so gross margin sits on its own line, and write one sentence explaining what is in your cost of sales.
• Write down your CAC, LTV and payback period, even roughly, and the assumptions behind each. Rehearse saying all three out loud.

Do this before the meetings, not during them. The founders who know these three numbers cold are the ones who look ready, because they are. Everything else in the raise, the deck, the story, the vision, sits on top of that foundation, and investors can tell within minutes whether the foundation is there.