Seed round business plan: what the plan and model must show

BusinessPlanHub Editorial Team · Published 11 November 2026

A seed round business plan is a plan with a financial model that turns the money you are raising into dated milestones and a month in which the cash runs out. The model is the part an investor opens, and the plan around it explains why each number is what it is. Our business plan for investors service writes that pairing.

This page is about the mechanics, not the investor’s wider criteria. If you want the lender-versus-investor test, the plan-versus-deck split and the exit question, read what investors look for in a business plan first. What follows is the working layer underneath: how to build the use of funds, the runway, the hiring plan, the cap table and the assumptions so they agree with each other.

How do you tie the use of funds to milestones?

You tie the use of funds to milestones by giving every dollar a purpose and every purpose a date. A line that says “$400,000, product” tells the reader nothing. A line that says “$400,000, product in production by month six” can be checked.

Take an illustrative raise of $1,000,000. The round numbers are invented, and so is the company.

Each milestone should be something a stranger could verify: a live product, a signed contract, a measured cost per customer. Then add the line that tells the reader where this money leads, which is what the next round will need to see. If your milestones do not reach it, the round is too small or the milestones are wrong.

UK companies using SEIS meet a version of this discipline from HMRC. Money raised through the scheme must be spent within three years of the share issue, on a qualifying trade, preparing for one, or research and development expected to lead to one. And the compliance statement can be sent only after the company has carried on the new trade for at least four months or spent at least 70% of the amount raised (HMRC, “Apply to use the Seed Enterprise Investment Scheme”, page last updated 25 May 2023, checked 11 November 2026). A use of funds that names its months makes that test easy to read.

How is runway worked out in the model?

Runway is the number of months until cash reaches zero, and it comes from the monthly cash flow rather than a rule of thumb. Take the cash in the bank, subtract each month’s net outflow (spending less money received), and count the months until the balance runs out.

Continue the illustrative company. It raises $1,000,000 and already holds $100,000, so it starts with $1,100,000. Its forecast net outflow is $45,000 a month in the first quarter, $55,000 in the second, $70,000 in the third and $80,000 in the fourth. That spends $750,000 in twelve months and leaves $350,000. If outflow then holds at $87,500 a month, the cash lasts four more months.

Two things make the figure honest. Show the cash line at the bottom of every month, and show a second version in which sales arrive later than forecast, so the reader can see how fast the date moves. The shape of that monthly sheet is covered in our guide to business plan financial projections.

What should the hiring plan show?

The hiring plan should show each role, the month it starts, what it costs in the model and the milestone it exists to deliver. Payroll is a line the reader will follow closely, because it drives the monthly outflow.

Two checks help. First, every hire should trace to a milestone, and every milestone should have someone responsible. Second, the start months in this table must match the months the cost appears in the cash flow. A hire who starts in month five in the plan and month eight in the spreadsheet is the kind of mismatch a reader finds in minutes.

What does the cap table before and after the round look like?

The cap table before and after shows who owns what today, and who owns what once the new money has converted into shares. It has to be arithmetic the reader can reproduce, which is why the instrument matters.

Y Combinator publishes the post-money SAFE and a user guide on its SAFE page. It says a SAFE is not shares until it converts into preferred stock in a priced round, and that on a post-money valuation cap SAFE the ownership sold is the investment divided by the valuation cap. Its own example is $1M on a $6.7M cap, about 15% (checked 11 November 2026). The same page notes that the post-money cap includes the options and option pool that exist before the priced round, but not a new or increased pool adopted as part of it.

An illustrative case. Two founders each hold 45%, and an option pool holds 10%. The company issues a $1,000,000 SAFE at an $8,000,000 post-money cap, so 12.5% is sold ($1,000,000 divided by $8,000,000). Assuming this is the only SAFE and the priced round values the company above the cap:

Each existing holder keeps 87.5% of what they had, because the SAFE takes 12.5% of the whole. The priced round that follows will dilute everyone again, and it may add a new pool, so show that as a further column once you have a view on it. Y Combinator also says that SAFE investors should be accredited, and that you should consult a lawyer licensed where your company was formed before using any version of the form. We are not lawyers, so take the share terms and the documents themselves to one.

Why does the model need an assumptions sheet?

The model needs an assumptions sheet because every number in the plan should trace to one visible input. The reader changes a price, a conversion rate or a start month and watches the cash line move. If an input is buried inside a formula, they cannot do that, and they may stop trusting the rest.

A workable assumptions sheet carries four things per input: the value, the unit, the source or reasoning behind it, and the date you last checked it. A sales assumption might read “15 customers by month 12, from a pilot conversion rate of one in four, source: our own pilot list”. A cost assumption might name the quote it came from.

Keep inputs apart from calculations, one value in one place, and label estimates as estimates. Nothing here promises an investor will like the numbers. It only means that when they test one, you can show where it came from.

How does the plan fit with the deck and the data room?

The plan is the source document; the deck is a summary of it, and the data room is where the evidence behind it lives. A data room is the shared folder an interested investor works through during diligence. Its contents are agreed between you and them, not set by a standard.

The UK schemes give one published picture of what gets requested. HMRC’s advance assurance guidance lists the business plan and financial forecasts, the latest accounts if available, the memorandum and articles of association, a copy of the register of members, the latest draft of documents used to explain the proposal to investors, and details of any other agreements between the company and its shareholders (page last updated 18 December 2024, checked 11 November 2026). That is a useful starting checklist for any seed raise, UK or not: the same papers answer the same questions.

If you are in the UK and considering SEIS, the HMRC guidance states a maximum of £250,000 through the scheme, and conditions including gross assets of no more than £350,000 and fewer than 25 full-time equivalent employees when the shares are issued (page last updated 25 May 2023, checked 11 November 2026). Check the current page before you rely on those figures, because HMRC can change them.

On advance assurance itself, HMRC says it can be shown to investors as an indication that an investment may qualify for a scheme, and that it is not a general endorsement or an indication of investment performance. You will usually need to give details of potential investors, and HMRC contacts you when it decides. The decision, like the investment decision, is theirs.

To see what a finished investor-facing document looks like, browse our investor sample business plans. They are fictional, illustrative examples, and none of their figures is a client result.

What is the best next step?

The best next step is to build the milestone table before you touch the rest of the plan. Write down what must be true before the next round, give each item a month, and price it. The runway, the hiring plan and the cap table all follow from that table, and so does the amount you raise.

If the numbers will not reconcile, or you want the plan and model written for an investor audience, a free 30-minute call is where to begin: we look at your situation, show how we build the plan and the financial model, and say how we can help. Plans start at $997, and the pricing page sets out what that covers. We write the document; whether anyone invests is up to the investor.

Sources: HMRC, “Apply for advance assurance on a venture capital scheme” (gov.uk, last updated 18 December 2024) and “Apply to use the Seed Enterprise Investment Scheme to raise money for your company” (gov.uk, last updated 25 May 2023); Y Combinator, “The SAFE” (ycombinator.com/safe). All checked 11 November 2026. The company, the cap table and every dollar figure in the worked examples are illustrative and invented.