Case: a one-page finance memo for the next round

The first thing an investor asks is: how much do you need, and when? The answer isn't the sum of everything the plan spends. While the money goes out, the project starts bringing some back, so what you need is the deepest point of the cumulative cash line.

How to find it:

1. For each period, take contribution minus investment: the project's net cash.
2. Keep a running total from the first period.
3. The lowest value of that running total is the peak cash need.

Klasna's EU plan spends 8,800,000 UAH over eight quarters, but its base case bottoms out at −3,650,000 at the end of the first year. Asking for 8.8 million would sell a bigger slice of the company than the plan ever uses.

Then two adjustments make the ask honest: size it on the weak case, the one the company has to survive, and add a buffer so the project never eats the company's last money. Klasna's rule is one million on top of the deepest point.

The calculation takes three columns: net cash per quarter, its running total, and the lowest point.

Klasna's EU plan, base case (contribution − investment, UAH):

The line keeps falling while quarterly net cash is negative and turns up once it becomes positive, in q5. The deepest point, 3,650,000 UAH, comes at the end of the first year. The line is back above zero only in q8, so the money is tied up for almost two years.

A common slip is to take the worst single quarter (−1,750,000) instead of the worst running total. The need is cumulative: every negative quarter adds to the hole dug by the ones before it.

A base case is what you expect; a weak case is what you have to survive. If the round is sized on the base case and the weak one happens, the company runs out of money halfway through the plan and has to raise again from a position of weakness, or cut the project when it is deepest in the hole.

Klasna's EU plan, weak case: contribution from new EU learners is lower in every quarter while the investment stays the same. Net cash: −1,800,000; −1,450,000; −750,000; −500,000; then +50,000; +400,000; +800,000; +400,000. Running total: −1,800,000; −3,250,000; −4,000,000; −4,500,000 in q4; then −4,450,000 and slowly up to −2,850,000 after eight quarters.

So the peak cash need is 4,500,000 UAH, 850,000 more than in the base case. With Klasna's rule of one million of buffer at the deepest point, the round should be at least 5,500,000. The investor's offer of 6,000,000 covers it with 500,000 to spare.

The deepest point says how much money a project needs. The end of the cumulative line says something just as important: whether, and when, that money comes back.

Klasna's EU plan after eight quarters:

• Base case: total contribution 9,950,000 against 8,800,000 of investment: +1,150,000. The line climbs back above zero only in the last quarter.
• Weak case: total contribution 5,950,000 against the same 8,800,000: −2,850,000. After two years the project still hasn't paid back, although it has been earning more than it spends since q5.

Both facts belong in a funding memo. An investor buying 12.5% of the company wants to know not only that the company survives the weak case, but also how long the money stays in the ground and how the picture looks at the end of the plan. A weak case that is still climbing at +400,000 a quarter is a slower story, not a failed one, and saying so honestly earns more trust than hiding it.

The quick check: total contribution minus total investment equals the last value of the running total.

A funding round pays for what lies ahead. Two kinds of numbers often sneak into an ask and make it bigger than the plan needs.

Sunk costs. Klasna spent 650,000 UAH on EU market research last spring. Leo wants it in the ask, "so that money comes back to us". But it is paid whatever the investor decides; it changes neither how much cash the project still needs nor whether the plan is worth doing. Asking for it would mean selling part of the company for money the plan doesn't use. The research can appear in the memo as context ("we've tested demand"), never in the amount.

Allocated overhead. The EU plan contains only costs that exist because of the EU: ads, partnerships with weekend schools, two EU-facing hires. The office and the finance team are there either way, so a share of them doesn't belong in the project's cash line.

The ask then stays at what the numbers support: the weak-case peak need of 4,500,000 plus the 1,000,000 buffer, 5,500,000, which the 6 million offer covers.

Comparing a loan and an investor on a good year flatters the loan. The real test is the weak case, with the loan's costs added to the cash line.

The bank's alternative: 6,000,000 UAH at 20% a year, interest only, so 300,000 UAH every quarter from q1, and the full 6 million due after three years.

Subtract 300,000 from each weak-case quarter: −2,100,000; −1,750,000; −1,050,000; −800,000; −250,000; +100,000; +500,000; +100,000. Running total: −2,100,000; −3,850,000; −4,900,000; −5,700,000; −5,950,000 in q5; then −5,850,000; −5,350,000; −5,250,000.

Two things change. The peak need grows from 4.5 to 5.95 million, almost the whole loan and no buffer at all. And the low point moves a quarter later, because interest keeps the line falling in q5. After two years the project is still 5.25 million down, with 6 million of principal due a year later.

With equity, the weak case is survivable. With debt, it becomes a cash crisis. That's why the investor here isn't the expensive option but the one Klasna survives.

"300,000 a quarter in interest" is abstract. "1,627 extra lessons every quarter" is something a team can picture and an investor can check against the business.

Units needed = fixed cost ÷ contribution per unit, rounded up.

Klasna's loan alternative costs 300,000 UAH a quarter. A full-price English lesson in the 16-pack leaves 184.50 UAH of contribution margin, so 300,000 ÷ 184.50 = 1,626.02, which means 1,627 lessons a quarter, about 542 a month. Measured against last year's average lesson (173.44), it would be even more.

This framing makes two points for the memo. First, the interest is real work: hundreds of extra lessons every month, including the summer, and Klasna had five loss-making months last year. Second, it explains to an investor why a profitable business still prefers equity for an uncertain expansion: the business's own margin is thin, and a fixed bill on top of a weak case is exactly the risk the investor's money removes.

A funding memo ends with what the investor can check later. Good milestones are early, measurable and different between the scenarios, so that everyone sees soon whether the plan is on the base path or the weak one.

In Klasna's EU plan the investment is the same in both cases. The only thing that separates them is the contribution from new EU learners:

By the end of q2 (February) a result near 400,000 says "base", near 250,000 says "weak", and the gap widens from there. That is the moment to act: adjust the ad spend, change the partnership mix, or confirm the plan.

Weak milestones measure activity (campaigns launched, money spent) or arrive too late and mix things together (the company's annual profit). They feel like progress but can't tell the two stories apart.