Capital Requirement Readiness

Why Do Growth-Stage Companies Need a Clear Use-of-Funds and Milestone Plan?

Written by Priyanka Madnani  |  Capital & Transaction Advisory, Terex Ventures  |  Updated September 2026

A fundraising ask becomes more credible when investors can see how the proposed capital connects to specific operating milestones. Growth-stage companies often know that they want to raise, but they have not always translated the growth plan into a quantified capital requirement.

Direct answer

Growth-stage companies need a clear use-of-funds and milestone plan because investors want to understand what the new capital will achieve, how long it should last and what evidence of value creation should exist before the next financing or strategic event. The funding amount should normally emerge from the operating model rather than being selected independently.

What a strong use-of-funds plan should answer

  • How much capital is required?
  • Which operating initiatives will receive the capital?
  • What portion supports working capital versus growth investment?
  • How much runway does the round provide?
  • Which milestones should be achieved before the next funding event?
  • What happens if revenue develops more slowly than the base case?

Where companies often lag

Some companies begin with a round size because it feels marketable or because a peer raised a similar amount. Investors may then struggle to understand why that number is appropriate for this business. The better approach is to connect hiring, marketing, capacity, technology, expansion and working capital to the forecast and calculate the resulting cash requirement.

Milestones matter because investors underwrite the next stage

The investor is not only funding today’s business. The investor is assessing whether the round can move the company to a stronger operating and valuation position. Milestones therefore need to be measurable and linked to the assumptions in the model.

How Terex Ventures can help calculate the requirement

Terex Ventures can structure the capital ask through Capital & Fundraising Advisory, linking use of funds to investor positioning and target investor profile.

Financial Modelling & Valuation can help translate operating assumptions into runway, cash needs, base/downside scenarios and dilution considerations.

Terex Ventures perspective: A round size should be a financial conclusion, not a marketing number. Investors are more likely to understand the ask when each major use of capital maps to a defined growth objective and measurable milestone.

Frequently Asked Questions

Should use of funds be very detailed in the pitch deck?

The deck should show a clear high-level allocation. More detailed schedules can be provided in the model or diligence materials.

How much runway should a company raise for?

There is no universal number. It depends on the company’s cash profile, milestones, sector and expected timing of future financing.

Should downside scenarios affect the funding ask?

Yes. Management should understand how slower revenue, margin pressure or working-capital changes affect cash requirements.

Calculate the Capital Requirement From the Operating Plan

Terex Ventures can help connect use of funds, milestones, runway and investor strategy.

Discuss Your Capital Requirement