How to Fundraise on a Short Runway

The Hard Truth About Fundraising in Tough Times

One of the most common asks founders come to me with is how to raise capital when they’re running out of cash. They’re down to three months of runway, desperate to raise money fast, and looking for tricks to close funding in one or two meetings.

Here’s where I have to be the bearer of bad news. There are no shortcuts in fundraising. The right guidance in these situations isn’t about closing quicker. It’s about buying yourself time to execute a proper fundraising process. If you’ve got less than six months of runway, your focus shouldn’t be on a “quick fix.” It should be on cutting burn and extending runway so you can give yourself a real shot at raising.

BTW - I know why people avoid this. It sucks to fire people. It sucks to disappoint vendors. It sucks... but the thing that should push you around this is that shutting down your company sucks more.

Cut Deeper Than You Think

This is the hard advice. You’re probably tempted to thread the needle—make minor cuts, squeeze through, and hope it works out. I get it. You’re probably afraid that it’ll be too hard to rebuild after making cuts. You also want to avoid difficult conversations whenever you can.

Where to Cut: Prioritize Big Moves (SALARIES)

For early-stage startups, the biggest expenses are almost always human capital related. Here’s how to approach payroll cuts, ranked from the highest impact to the least:

1. Let People Go Completely: 
   It’s painful, but reducing headcount is often the fastest and most impactful way to lower burn.
   

2. Furlough Team Members: 
   Temporarily pausing employment can save costs while leaving the door open for a return when funding improves. 
   

3. Replace Roles with Overseas Talent: 
   You can find overseas options for 10–30% of the cost of US-based team members.  And not just virtual assistants... Skilled people in engineering, design, etc., are all available overseas. (Btw, I always offer intros to my recruiter, who has made a bunch of successful hires for me and my founders. Just reply and ask).
   

4. Temporary Compensation Reductions: 
   Offer pay cuts in exchange for additional options or future pay restoration. If your team is excited about the company still, equity can be the right tradeoff here.
   

5. Salary Reductions Without Layoffs: 
   A smaller sacrifice that can buy you some extra time without losing the team.

Beyond Salaries

Salaries aren’t the only place to save. Here are a few other areas to explore:

• Turn Off Paid Acquisition: 
  Cut non-essential spending on ads and focus on organic growth. Anything that can easily be turned off should be turned off. The great thing about this is it’s a spigot that can also be easily turned back on when you need to!
  

• Negotiate Payment Terms with Suppliers or Service Providers:
  This might feel icky to go against commitments you made, but remember that vendors don’t benefit if you go out of business. Delaying payments and renegotiating will give you much-needed breathing room.
  

• Reduce Office and Operational Expenses: 
  If your startup has physical office space, consider moving to a more affordable location or, better yet, break the lease completely and go remote only. Office space includes a lot of hidden operational costs, such as utilities, software subscriptions, office supplies, etc., so there’s a lot of meat on that bone.
  
  You may love your office, but do you love it enough to risk the life of your company? Cut deep here, and remember if you pull the company out of this, you can always find your next office space.
  

• Negotiate Lower Rates on Software or Subscriptions:
  This is a fun one that I don’t think people realize is possible. Software pricing feels so set in stone because you see it posted on a website. The price is the price, right? Nope. The price is just a field in a database that can be modified.
  
  Similar to suppliers and service providers, software providers would much rather discount their stuff to help a customer stay alive than completely going out of business. Reach out, explain the situation, and make the ask. You’ll be pleasantly surprised at who works with you on this.
  

• Cut Non-Essential Perks or Employee Benefits: 
  This might not be a huge source of savings, but every little bit helps. Of course you don’t want to undermine employee morale, but remember this is wartime, and employees who are in the trenches with you will understand. It might even bring them closer to you.
  
  Think about cutting perks such as free meals, gym memberships, etc., and communicate that it’s temporary. Shift focus to essential benefits and prioritize things that directly impact employee retention and productivity.

Survival Over Everything, Impossible is Nothing

Extending runway isn’t easy, and the moves you make will be painful. But it’s absolutely necessary if you’re running out of cash and hoping to make it to a successful fundraise. 

With a bunch of difficult steps in front of you, the last thing I can leave you with is to say it’s all absolutely possible. As a VC and an advisor, I’ve seen it multiple times. I’ve heard incredible stories of companies making aggressive moves to see the next card in the business and come out stronger than ever. Reframe what lies ahead as an incredible challenge, win, lose, or draw, something you'll be able to share stories about for years to come.

Good luck!

Be chased,
Jason 

From 'let’s change the world' to 'let’s just survive' in 12 months – a true founder rite of passage.

This is so cool. I wonder if the US will actually ever adopt something like this…

Not me … 😅 

Small asks!

If you thought this was helpful or enjoyable in any way, I’d love for you to:

• Forward this newsletter to others who would enjoy it (use your referral link and get some cool rewards☝️)

• Follow me on Twitter where I’ve begun building in public (my course, my podcast, etc)!

• Listen with a friend to Funded, my podcast that tells the rollercoaster stories of how founders raised millions (and subscribe🙏)

• Ask me your fundraising questions so I can help you and cover them in a future issue

• Are you planning to fundraise? Join Adamant Fundraising - the fundraising accelerator program that's helped founders raise over $311M 💰

• Let us launch a best-in-class fundraise for you. Pain-free and effortless on your end!

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