Found Early, the Round Pays
Take an illustrative case. A Series B of€15M, a burn of €0.625M a month, 24 months of runway. Somewhere in thestructure sits a break of the kind this stage produces. Assume it takes sixmonths to fix once someone has found it. Same break, same six-month fix. Onlythe date of the diagnosis differs.
Found at month six, the company learns whythe traction falls short of expectations, with 18 months left. It runs the fixinside the plan and on its own budget, and still has 12 months of runway togain traction and get back on plan. The round covers it, with zero new money.
Found at month eighteen, the explanations have run out. Every quarter the break stayed unnamed, the options narrowed: repair, then exit, then a sale on someone else's terms. The same fix now uses the last six months of the round, and showing the repair in the numbers takes six months beyond it. Firefighting and the bridge come to at least €2.4M of new money.
The €2.4M buys the time to recover. There covery itself is a separate bill. The bridge investors pay first. Then every shareholder pays, the CXOs included.
Found early, the same six months of work fit inside the plan, with twelve months to spare.
The early fix can fail as well, and theusual reasons sit with people.
In the full essay
· What the €2.4M is made of, lineby line, and what it leaves out
· Why the early fix fails too,and what has to happen before it starts
· What a failed fix costs atmonth six, and at month eighteen