Overview

Every founder needs a clear picture of the capital required to reach the next stage of growth. Your funding gap is the difference between projected revenue and projected expenses over the next 12 to 18 months. This number shapes your funding strategy and helps you identify which opportunities align with your needs.

Your gap reflects the real costs of operating your business.
These include the people you hire, the tools you depend on, the systems that deliver your work, and the infrastructure that keeps you compliant and functional. Revenue projections shape the other side of this equation. Early-stage revenue tends to be inconsistent, so realistic estimates bring your planning closer to what's actually achievable.

Understanding both sides of this equation gives you clarity on how much outside capital you need to maintain momentum. Once you identify this gap, you can evaluate which grants, investments, or other capital sources serve your growth plan most effectively.

How to Calculate Your Funding Gap

1. List your main costs for the next 12-18 months
Include team salaries, software and tools, marketing, operations, professional services (legal, accounting), and product development.

2. Estimate your revenue within the same timeframe
Base this on what's already in your pipeline and what feels reasonable given current traction.

3. Calculate the gap
Subtract projected revenue from projected expenses. The remaining number is your funding gap.

Example:

• Projected expenses: $250,000

• Projected revenue: $80,000

• Funding gap: $170,000

This number doesn't need to be perfect. It's a working estimate that anchors your milestones and informs the funding decisions you make moving forward.

Why This Number Matters

Your funding gap determines:

• Which opportunities to pursue: A $25K grant won't close a $200K gap, so you need multiple sources or larger awards

• Your timeline: Knowing your runway helps you prioritize faster funding pathways when needed

• Your pitch: Funders want to see that you understand your financial reality and can articulate what their capital enables

Founders who can clearly state their gap, justify it with real costs, and connect it to specific milestones demonstrate financial competence that reviewers trust.

What's Next

The next lesson walks you through mapping your next fundable milestone and connecting it to the level of funding that supports it. You'll learn how to break your gap into achievable phases that align with how funders evaluate progress.