Series A finance: hire now or protect runway?
A fictional accounting-software startup has completed a financing. The founder wants to hire ahead of revenue, while the board wants at least 12 months of cash runway. Show the trade-off and the limits of a flat-burn model.
Numeric’s Series A announcement is a verified historical funding milestone. The fictional startup in this exercise has separate, illustrative cash and operating inputs; these are not Numeric’s finances. Numeric later announced a Series B.
Independent Finance Circle learning material. The source organisation does not sponsor, author or endorse this exercise.
Clarify. Structure. Calculate. Defend.
Take 2 minutes to clarify the decision and definitions, 3 minutes to structure the analysis, then work the exhibits. Finish with a concise recommendation and answer a follow-up. The time is a suggested practice format, not an employer requirement.
Clarify before solving
What are the data basis and reporting boundary?
Numeric’s Series A announcement is a verified historical funding milestone. The fictional startup in this exercise has separate, illustrative cash and operating inputs; these are not Numeric’s finances. Numeric later announced a Series B.
Which assumptions can I use without requesting more data?
USD millions. Unrestricted opening cash 6; monthly customer collections 0.25; monthly operating cash payments 0.65. A new hiring plan adds 0.10 monthly cash payments, with no near-term collections improvement. Ignore interest, taxes and additional financing.
What decision am I expected to support?
Spend at base burn for three months, then hire. Calculate cash when hiring begins, remaining runway after hiring, and total runway from today.
Build your structure
- Unrestricted cash and monthly net burn
- Immediate hiring and liquidity reserve
- Delayed-hiring cash schedule
- Milestones, financing lead time and downside
Use the branches that matter to this decision. A memorised framework is less useful than explaining why each analysis could change your recommendation.
Everything you need to work the case.
Assumptions & boundaries
- USD millions. Unrestricted opening cash 6; monthly customer collections 0.25; monthly operating cash payments 0.65.
- A new hiring plan adds 0.10 monthly cash payments, with no near-term collections improvement. Ignore interest, taxes and additional financing.
- Runway is calculated to zero cash with constant monthly burn; a real operating reserve would shorten it. Director option delays hiring for three months.
Illustrative cash inputs
| Driver | USD million |
|---|---|
| Opening cash | 6.00 |
| Monthly collections | 0.25 |
| Monthly cash payments | 0.65 |
| Additional monthly hiring payments | 0.10 |
Choose the responsibility. Solve the decision.
Each level uses the exhibits above and asks a different question. Your entries stay in this open page only; copy your work before leaving.
Calculate net burn and runway.
Calculate monthly net burn and base runway.
Can we use recognised revenue instead of collections?
Numerical checks compare your arithmetic with the case model. Written recommendations are self-practice and are not automatically graded.
03 · Reveal worked solution & decision guide
Expected numerical answers
- Monthly net burn
- 0.4 USD million
- Base runway
- 15 months
Work through the calculation
- Net burn = 0.65 − 0.25 = 0.40. Runway = 6 / 0.40 = 15 months.
A strong concise response
My calculation shows that monthly net burn is 0.4 USD million; base runway is 15 months. Use cash collections and payments, not revenue and expenses, unless accrual-to-cash adjustments are explicitly modelled.
Answer the interviewer follow-up
Can we use recognised revenue instead of collections?
Only if a cash-conversion bridge supports that substitution. Runway depends on cash timing, not accounting revenue alone.
Assessment rubric · 20 points
For self-review or mentor discussion. This rubric is not an automated written-answer grade or an employer scoring system.
Correctly derives all 2 numerical results for this level, keeps signs and units consistent, and explains the method.
Explains the objective: Calculate net burn and runway. States the supplied scope, timing and metric definitions before calculating.
Use cash collections and payments, not revenue and expenses, unless accrual-to-cash adjustments are explicitly modelled. Addresses the interviewer follow-up without contradicting the facts.
Leads with a clear conclusion, distinguishes facts from assumptions, and identifies the next evidence needed. Does not claim the source company asked or endorsed this question.
Use full precision until the final rounding. Alternative written recommendations may be reasonable if they respect the facts and explain assumptions. This is Finance Circle’s guide, not an official source-company answer.
Source & attribution
The references below identify the public reporting, hiring guidance, research or mock-interview material used for context. Finance Circle wrote the exercise and its answers. Illustrative figures are explicitly identified; they are not company results or findings.
Funding round and company context are sourced; case cash balances, hiring choices and answers are original illustrative material.
Source reviewed 30 October 2026. No external page is needed to answer this exercise. Company names and logos identify sources only. All trademarks belong to their respective owners.