How to Secure Startup Runway [+Top Grants]

On your startup journey, there will undoubtedly be times when you need cash.

You might’ve heard of startup runway grants, funding provided to help your startup grow without diluting your equity or requiring repayment. 

In this guide, we dive into this type of funding, showcase the top grants to apply for, and offer funding alternatives.

What is a cash runway?

A cash runway is the number of months it would take to reach a cash balance of 0 based on your average monthly expenses.

For startups, your cash runway is a very important metric for measuring your business’s health and sustainability. Long runways typically mean your revenue is exceeding your spending. This provides a valuable buffer for emergencies, sudden expenses, or low-performing months.

How to calculate your runway

Calculating your cash runway can be performed by hand or through an online calculator. The most basic runway calculation is:

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Your net burn rate (also known as the cash burn rate) is the combination of revenue and expenses divided by time, and can be calculated by:

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A negative burn rate is a good thing. This means positive cash flow and an extended runway.

What is a good amount of runway?

While there is no golden number for what a good runway length is, a typical number for early-to-mid staged SaaS businesses is between 12 and 22 months.

Having at least a year's worth of cash reserves means you can make it to the next round of funding. But having almost two years of funding will allow you to pivot if the next round of funding does not go your way.

It’s important to consider what your company's objectives are when cash planning. Accelerated growth cycles and internal milestones may alter your burn rate and affect your runway.

Preparing your pitch for a runway grant

A solid pitch is vital for securing a runway grant for your startup. Here are some guidelines to help.

Know your business

Knowing your business model is very important to pitch your startup. Here are a list of questions you need to answer:

• What is the problem you are trying to solve and how do you intend to solve it?
• What experiments have you performed to prove your business case?
• How do you intend to utilize the extended runway if awarded the grant?
• What are your numbers–how much do you make, how much capital do you need to achieve your goals, and what are your margins?
• What is your unique value proposition?
• What proprietary edge do you have over your competition and how do you indent to protect it?
• How is your business relevant to emerging trends?

Once you’ve established your business model, numbers, and objectives, it’s time to determine the grants you want to pursue.

Do your research

Grant applications can vary largely in their specificity so it is important to determine the grants you want to apply for (more on that later) before you prepare your pitch. Here are some things to consider when selecting grants:

• Check the eligibility to ensure you qualify
• Make sure you identify the key pain points the grant is trying to alleviate
• Determine the format and length requirements
• Pay attention to submission deadlines and notification timelines
• Know the award amount

Prepare your pitch

Always remember when preparing your pitch that you are not the only business pursuing the grant. You must capture and retain the attention of the investors.

Be sure to add personality and excitement to your pitch. The numbers and details are important, but your pitch should change the way the readers think and feel. 

Startup grants for runway extension

Ready to find the right runway grant for your startup? Here’s a list of government and private/nonprofit funding sources:

Government startup runway grants

These government programs that offer direct funding for startups looking to expand their runway.

Grants.gov

Government agencies are a major provider of grants. The US offers a central database where you can search by eligibility and category to find the small business grants that are the right fit for you. Grants.gov has an extensive support center and learning center to guide you through all aspects of the grant writing process.

State and local government grants

States, counties, and cities are also awarded grant funding from the federal government that in turn is offered to local businesses. Be sure to tap into this local ecosystem for funding runway. For example, the California Office of the Small Business Advocate lists local funding opportunities for city and county agencies throughout the state.

Economic development organizations

Another resource for finding runway grants is through local economic development organizations. Whether or not these funds are offered as runway grants for small businesses depends on the organization and your location, so be sure to check out what's available to you.

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs

If your startup relates to scientific research or innovative technology, then the SBIR and STTR programs are worth investigating. Federal agencies list the types of research they’re hoping to fund through solicitation listings, and if your idea qualifies for one you can submit a proposal. The funding potential is up to $1.75 million but unsolicited proposals are not allowed.

Private and Nonprofit

Many corporations and large nonprofits offer startup runway grants. The eligibility is often location-based so be sure to tap into those local resources. On the national level, here are some grant opportunities to fund your runway.

Fast Break for Small Business

Administered by Accion Opportunity Fund, this grant opportunity offers 150 startups a $10,000 runway grant plus a $500 credit to LegalZoom services. Only businesses that have been operating for three months or more, have less than $1 million in revenue, and are based in the US qualify. 

National Association for the Self-Employed (NASE)

The NASE offers $4,000 growth grants. These grants are offered to association members. Applications are accepted year round and awards are provided quarterly. Be aware that you will have to include details on how you plan to utilize the funds.

Venmo Small Business Grant

Each year, Venmo awards 20 business owners a $10,000 grant through its small business grant program. Additional perks include mentorship from industry leaders and exposure through Venmo’s social media pages. 

Bizee’s Fresh Start Business Grant 

Bizee offers $2,500 grants through their Fresh Start Business Grant. This grant is for US entrepreneurs over 21 looking to begin their startup or ready to accelerate growth. As part of your application, you will have to upload a 2-minute pitch and a sample business plan.

Alternative methods for runway funding

While funding your runway through grants might seem ideal, applying to the right ones is a time-consuming process. And the grant amounts are typically lower than other forms of funding.

Here are the top two alternatives to extend your startup's runway:

1. Offer BNPL to increase annual deals As a SaaS company, you can offer buy now pay later (BNPL) to customers just like an ecommerce company would. With Capchase Pay, you get the full annual contract value upfront, and we collect monthly payments from your customers. This gives you more cash when you need it—and saves deals from going cold.
2. Opt for flexible, SaaS-focused financing You can also take advantage of Capchase Grow to secure ARR-based financing that you can scale up or down on a monthly or quarterly basis depending on your needs. 

Learn more about Capchase Pay and Capchase Grow.