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How much capital should you raise?

An article we liked from Thought Leader Alex Iskold of Startup Hacks:

How much capital should you raise?

When you are going out to fundraise you need to decide how much capital to raise.  How much capital should you raise

A typical answer we hear looks something like this: We need to build X features in our product, and we need to hire Y people to make it happen. So our burn would be Z and we need a buffer of W months, so here is the amount we are raising.

This typical answer isn't great, and isn't likely to excite prospective investors.

No one wants to fund your burn.

Investors are looking to fund a company to a milestone. In reality, there are two kinds of milestones for every company - profitability, or next round of funding.

Profitability is possible, but isn't typical for venture-backed companies. Startups and VCs are in the fast growth game often at the expense of profitability. The public companies, on the other hand, are in the game to generate profits (Not always, but more often than not).

In reality, when disciplined investors evaluate whether to put money into your business, they ask - what milestones do you need to achieve to get to the next financing? That is, the pre-seed investor asks what it would take to...

Read the rest of this article at startuphacks.com...

Thanks for this article excerpt and its graphics to Alex Iskold, the Founder and Managing Partner at 2048 Ventures, of Startup Hacks.

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