How Much Should a Startup Raise? A Capital Planning Framework
One of the most common founder questions is simple.
How much should we raise?
The wrong answer is whatever investors are willing to give.
The right answer is tied to milestones.
Capital is not raised to survive.
Capital is raised to purchase the next credible inflection point.
If you do not define the milestone first, you will either under raise and scramble or over raise and create unnecessary pressure.
First Principle: Capital Buys Time and Milestones
A properly structured raise should buy:
18 to 24 months of runway
A clear product or revenue milestone
Enough traction to justify a higher valuation next round
You are not raising to fund payroll.
You are raising to change your company’s risk profile.
Before determining the amount, ask:
What must be true in 18 months for the next round to be easier?
What milestone materially increases enterprise value?
What proof do investors need to see next?
Examples of milestone shifts:
From pre revenue to validated product market fit
From 500k ARR to 3 million ARR
From pilots to multi year contracts
From early traction to repeatable acquisition
The capital amount should directly support that transition.
The Risk of Under Raising
Founders sometimes try to minimize dilution by raising less.
This often backfires.
Under raising leads to:
Short runway
Panic fundraising
Weak negotiating leverage
Flat or down rounds
Higher dilution under pressure
Raising 1.5 million when you truly needed 3 million may preserve ownership today but cost you more ownership later.
Investors prefer companies that raise enough to operate from strength.
The Hidden Cost of Over Raising
Over raising creates a different problem.
It can lead to:
Inflated expectations
Higher burn than necessary
Over hiring
Pressure to grow into valuation
If you raise at a 30 million valuation but only build to a 40 million milestone, your next round becomes difficult.
Capital efficiency matters.
The right amount of capital is not the maximum available.
It is the amount required to reach the next credible valuation step.
The Capital Planning Checklist
Before raising, founders should model:
Current runway
Projected burn with planned hires
Revenue ramp timing
Conservative revenue scenario
Best case revenue scenario
Raise timing buffer
Then determine:
How much capital gets us to 18 to 24 months with margin for error?
How much runway do we want remaining when we start the next raise?
You do not want to raise with three months of runway left.
You want to raise with at least nine to twelve months remaining.
That is leverage.
Final Thought
The right amount of capital buys your next step up in enterprise value.
Not survival.
Not comfort.
Not ego.
Milestones drive valuation.
Capital buys milestones.
Model that correctly and fundraising becomes strategic instead of reactive.
If you’re preparing for a capital raise or need clarity on your next 18–24 months, let’s talk.
