How much should you raise? A founder’s guide to fundraising targets
Struggling to determine how much to raise for your startup? Learn how to set the right fundraising target based on market data and investor expectations.
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How to start saving money
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Why it is important to start saving
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How much money should I save?
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What percentage of my income should go to savings?
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One of the most common questions founders ask is: How much should I raise? The answer isn’t as simple as picking a number. It depends on your startup’s stage, growth trajectory, and fundraising strategy. Raise too little, and you risk running out of cash before hitting critical milestones. Raise too much, and you could over-dilute your equity.
So, how do you determine the right amount? Let’s break it down with data-driven insights and strategic considerations.
1. Market benchmarks: what’s normal?
Before deciding how much to raise, it’s essential to understand what’s happening in the market. Investors assess startups based on funding trends, industry norms, and capital efficiency. The Carta US Startup Cheat Sheet H2 2024 provides up-to-date benchmarks on round sizes, valuations, and dilution trends across different funding stages. Reviewing these benchmarks can help ensure your ask aligns with market expectations.
Here’s a general guideline based on recent market data:
- Pre-Seed: $500K – $1.5M
- Seed: $2M – $5M
- Series A: $8M – $15M
- Series B: $20M+
These numbers can vary by industry and geography, but they provide a useful reference point.
2. Raising enough to hit key milestones
Investors expect each funding round to help you de-risk your startup and move closer to profitability. The amount you raise should cover the costs of achieving specific milestones that will justify a higher valuation at the next round.
Typical investor expectations by funding stage:
- Pre-Seed → Seed. Prove your MVP works, secure early customers, and validate your go-to-market strategy.
- Seed → Series A. Show meaningful traction. For SaaS, this often means $1M+ ARR or 50K+ monthly active users for consumer apps.
- Series A → Series B. Investors expect scalable growth, strong unit economics, and a repeatable sales process. Growth rates of 2-3x year-over-year are common expectations.
💡 Reverse-engineering your funding needs based on expected milestones ensures you raise enough to reach the next round without over-diluting equity.
3. The 18-24 month runway rule: how to calculate your raise
One of the golden rules of startup fundraising is ensuring your round gives you at least 18-24 months of runway.
Why this matters:
- Fundraising takes time. Most rounds take 6+ months to close, and you don’t want to raise under pressure.
- Market conditions fluctuate. Raising too soon could mean settling for less favorable terms if the market shifts.
- Growth milestones take longer than expected. Scaling a sales team or refining product-market fit often requires more time than anticipated.
How to calculate your fundraising target:
(Monthly Burn Rate × 18−24 months) + Buffer for unexpected costs
- Example: If your startup burns $100K per month and you want a 24-month runway: $100K x 24 = $2.4M
- After factoring in unexpected expenses, your target raise should be around $2.5M – $3M.
💡 Ensuring a sufficient runway prevents rushed fundraising and allows you to operate strategically.
4. Balancing dilution vs. growth: how much equity should you give up?
While raising more capital can reduce risk, every dollar comes with dilution trade-offs.
Typical equity dilution per round:
- Seed Round: Founders typically give up 15-25% of equity.
- Series A: Another 20-25%, depending on valuation.
- Series B+: Further dilution, but often at higher valuations.
Finding the right balance:
🚩 Raise too little: You risk running out of money before reaching key milestones, making your next round harder.
🚩 Raise too much: Over-dilution can reduce your long-term ownership stake and control.
The ideal raise is one that gives you enough capital to grow without sacrificing too much equity early on.
Final thoughts
Determining how much to raise is a mix of market data, strategic planning, and financial forecasting. Make sure your raise covers 18-24 months of runway, aligns with industry benchmarks, and positions you for a successful next round. By being thoughtful and strategic, you can optimize your fundraising process and maximize your startup’s long-term success.
Need help finding the right investors? Capwave.ai can match you with VCs that fit your fundraising goals. Sign up today!
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