#8: The exact math behind your fundraise amount

Don't shoot from the hip with your raise...

Mar 13, 2025

👋 Hey, Diana here! Welcome to this Operations Optimist newsletter. Each week, I tackle questions about building operations functions in startups and share my lessons from working in venture capital! In today's newsletter, we break down how to determine exactly how much money to raise for your startup. Be it your first time or you’ve done it before, your fundraise should match your goals and budget.

Most first-time founders either ask for too little or wildly overestimate what they need, hurting their cap table and growth plans. Here is the 5-step process to determine your perfect fundraising amount – no guesswork required.

5 steps to calculate your perfect fundraising amount even if you're a first-timer

In order to determine the right amount to raise, you need a vision and budget.

1. Define specific goals

Your fundraise isn't just about survival — it's about achieving specific objectives that will position you for a successful next chapter (be it the next raise or profitability).

Make a list of 3-5 concrete milestones you'll hit with this funding. These might include:

Reaching $X in monthly recurring revenue
Launching key product features that unlock new markets
Achieving specific customer acquisition metrics
Building out critical parts of your team

These milestones should directly address the biggest risks in your business. If retention is your challenge, your milestone might be "improve retention from 60% to 85%." If distribution is your challenge, perhaps "reach 50,000 monthly active users."

These milestones become the backbone of your fundraising narrative.

2. Plan for a 18-month runway

The math here is simple: fundraising takes time (3-6 months on average, depending on your fundability), and you need to show meaningful progress before your next raise.

If you only raise for 12 months, you'll be fundraising again when you've barely had time to execute on your plans. This puts you in a weak negotiating position. 18 months gives you a full year to build and show traction, then 6 months to secure your next round before running out of cash. Going for 24 months might be even better, if the total raise amount remains reasonable for the stage/geography you operate in.

3. Create a budget

And now, this is where the tactical work comes in. Open Google Sheets and create a monthly breakdown of all company expenses with a forecast to achieve these goals:

Team salaries (including planned hires and when they'll join)
Marketing/advertising spend
Technology costs (hosting, SaaS tools, etc.)
Travel for business development
Legal/accounting services

Many first-time founders ask if they should include their own salaries. The answer is yes. Financial stress impairs decision-making and performance. Pay yourself a reasonable salary — typically at or slightly below market rate for your role in the early days. Once the company approaches profitability, you can consider adjustments.

Add 10-15% buffer for unexpected expenses, because there will always be something you didn't anticipate.

4. Project your revenue realistically

You can consider modeling several revenue scenarios: base case (what you honestly expect), conservative case (if things move slower than expected) and optimistic case (if things go exceptionally well).

Remember: you're raising based on the conservative case, not the optimistic one. It’s better to underpromise and overdeliver when it comes to your revenue projections.
This builds credibility with investors and ensures you won't run out of money prematurely.

At this point, you should have a spreadsheet outlining the costs, revenue and the expected burn rate in the next 18 months to achieve your goals. And that’s how much you need to raise.

5. Calibrate using market benchmarks

Lastly, no fundraise happens in a vacuum. Your industry, technology, and geography all significantly impact appropriate raise amounts and investor expectations. A European hardware startup round size will differ dramatically from a San Francisco based AI company.

Here are some great resources to calibrate your raise depending on where you are based:

Baltic Startup Funding report by Change Ventures
European State of Tech by Atomico
US market data by Carta

And one last thing. You might be wondering, what about valuations? Rightfully so, more on that next week.

That's it.

Here's what we covered today:

Define specific, impressive goals that will position you for your next round
Plan for at least 18 months of runway to avoid constant fundraising
Build a detailed budget and project your revenue realistically
Look at market benchmarks to calibrate your fundraise

Fundraising is between the art of storytelling and the science of predicting the future. Having intentional, thought-through rationale for your raise amount and strategy will make investor meetings a breeze.

Weekly resource list

Fuel Finance has great templates for your early-stage finance needs
How to create milestones slide by Open VC

Thanks for reading! Tell me what you thought of today's email.

Operations Optimist