Considering Your Raise
A lot of businesses start with a large number. They begin with the complete raise they anticipate to run. Typically this number ranges between $1M and $10M.
It’s good to have the big picture in mind. Some companies consider raising it all at once because they want to get the fundraising out of the way.
However, one thing to consider is that raising too much money on a round will cost you equity. This may be equity that you don’t have to give up.
Keep in mind that your valuation is low at the beginning. It’s best to raise only the funding you need to reach the next milestone, and no more, no less.
As you grow the business, your valuation will go up which means you give away less equity. Think about breaking your fundraise into tranches. It will save time and make each fundraise easier.
Your milestones In fundraising are specific goals you need to accomplish. When crafting your fundraise story focus on key milestones including those you just hit and those you are striving for. This demonstrates you are making progress.
Here are the 4 types of milestones to consider:
Team – Make sure you are hiring key people that can help you grow the business.
Product – This means bringing the product to a new level of completeness.
Sales – Strive for achieving sales traction such as reaching $50K MRR.
Fundraise - Aim for landing a big investor with a specific commitment or investment.
While you may not always hit the milestones you planned, you will most likely find success along the way which demonstrates accomplishment to showcase to potential investors.