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Determine the right amount to raise

Have quantified objectives

The amount to raise is not defined randomly but according to quantified objectives. These objectives must be clearly defined: recruitment planned in the short and medium term, customer acquisition, release of a new version of the product...

It should be noted that this step is necessary because both private investors and funds will ask for justifications. Normally, these objectives are defined over 15-18 months, until your next round, which makes it possible to calculate the cash burn and then determine the total amount to be raised.

Remain realistic

It is crucial to avoid determining the amount to raise according to criteria that are too subjective, in particular by comparing yourself with competing players who have recently raised funds or by relying on the dynamism of the sector.

If this can give a scale of the amount to be sought, you should remain focused on the specific objectives of your startup.

Keep a floating amount & valuation

At the beginning of your fundraising, especially during the first meetings, it is not a problem not to give a desired amount or not to offer a fixed valuation to investors.

Concerning the amount you’d like to raise, the idea is to give a range. Investors know that the implementation of the development plan may cost more than expected, so it is better to be transparent from the outset and give an estimate of the amount required rather than an unrealistic precise amount.

As for the valuation (on which therefore depends the share of the capital that will be transferred to the Business Angels), it is not supposed to be totally fixed at the beginning of a fundraising event. We will come back to this key question in detail, but please note that for a seed round the dilution rate is generally between 20 and 30%.

Before each round, you must have a range in mind. For us, it was from 6 to 10 million euros. The execution of our development plan cost $4 million, and we played it transparent with investors by telling them that they knew it never went as planned... And that to be able to really execute the initial plan, we needed at least $6 million. For dilution, we also had a range of 20 to 30%. Cedric from //[Link to the article](

Keep a low range, even if it means increasing its amount
We can obviously make mistakes (small ones!) about the amount we are looking for, especially at the beginning. To rectify them quickly if necessary and explain yourself to the investors concerned, especially after the first meetings, is essential in order not to get burn.

Finally, it is clearly not advisable to consider raising funds in a top-down approach. It is better to increase the amount you are looking for during the round, even if it means having to renegotiate certain conditions of the agreement (notably the valuation) to bring in other shareholders, than to have to raise less if the round lasts longer.

Updated on: 15/04/2019

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