Show us a pre-seed runway model and we will show you, most of the time, 25–40% in hidden burn that the founder has either forgotten or wishfully under-stated. The math is rarely intentional optimism — it is almost always a real omission. This piece is a walk-through of where the gap usually hides, and what the honest version of the model looks like.
The categories most founders under-count
- Statutory and compliance cost. PF, ESI, gratuity, professional tax, GST registrations, annual filings. Adds roughly 11–14% on top of cash comp.
- Equipment and onboarding. Laptops, monitors, keyboard/mouse/headset, software seats. Roughly ₹1.8–2.6 L per hire, one-time.
- Cloud and compute. Pre-launch is cheap; production with real users is not. A working assumption is 2–3× pre-launch cost within 6 months of GA.
- Customer-acquisition pilot spend. Even if you do not plan to spend on paid, you will end up running ₹2–8 L/month of experiments by month 9.
- Vendor + tooling sprawl. CRM, analytics, payments, support, design tools. Net of consolidation, ₹40K–80K/month per 5-person team.
- Founder cash + buffer. Most pre-seed founders pay themselves a token salary in months 1–6 and a real salary thereafter — the step-up is real and frequently missed.
- Closing buffer. Plan to close your next round 6 months before runway exhaustion, not at month 17 of an 18-month runway. The buffer is non-negotiable.
A real model, side by side
Monthly burn — the model vs the reality
- Comp (cash)
- Statutory + benefits
- Cloud + tools
- Marketing experiments
Composite from a typical 6-person pre-seed team in months 1–18. The model usually flat-lines around month 4; the reality drifts up through month 14.
If you sum the same model with only the cash-comp line, you get the budget most founders carry in their head. If you sum it with all four lines, you get the real monthly burn, which by month 12 is roughly 35% higher than the same founder's day-1 estimate. That gap, multiplied by 18 months, is typically 8–12 weeks of runway the founder did not budget for.
The honest framework
Honest runway — multipliers to apply
×1.18
Comp grossed-up
Statutory + benefits on top of cash comp
×1.4
Cloud (month 6+)
Real production cost vs pre-launch baseline
+₹2L/hire
Onboarding one-time
Equipment, seats, setup, payroll
−6 mo
Runway buffer
Round closes 6 months before exhaustion, not at it
Apply on top of the founder's own line-by-line model. Always.
How to read your own model honestly
Three checks we run on every founder's runway model in diligence:
- Re-cost every line item at month 12, not month 1. Most models are built at month-1 cost. The real cost at month 12 is higher across cloud, headcount, and ops. If the model flat-lines, it is wrong.
- Add a 10% line called 'unknown unknowns.' Every real company hits at least one major un-modelled expense — a legal fee, a compliance ask, a vendor renegotiation, a hire that did not work out. Budget for it explicitly.
- Compute the next-round trigger date as 6 months before runway exhaustion. If your effective runway is 12 months rather than 18, you need to be in fundraise mode from month 6, not month 12.
“The most expensive thing in a pre-seed model is the line you did not put in it. Found early, it is a re-plan. Found at month 15, it is a down-round bridge.”
When the honest model says you cannot do this round
Sometimes the honest model says the round size is wrong. The founder raised ₹4 Cr at pre-seed, and the honest 18-month plan needs ₹6.2 Cr. There are three options at that moment: (1) raise an extension immediately, before the team is hired; (2) cut scope and stretch the round to 24 months at lower headcount; (3) make the team plan more modest. We have backed founders who took each path; we have never backed a founder who chose option (4), which is to proceed as if the gap did not exist. That is the path to a desperate bridge at month 14.
The honest model is a kindness to your future self. It is also one of the simplest things an early-stage investor can help you build. Bring it to us in week 2; we will sit with you for two hours and pressure-test it. That conversation is the cheapest insurance the cheque buys.