The growth of a startup can be greatly accelerated by fundraising, but it can be difficult to determine when to begin. That’s because getting funding doesn’t only include pitching a concept and getting money. You should give your decision some serious thought.
Before we even start by telling you how to raise it, you should know the very basic terms of fundraising:
In an ideal world, you should raise as much capital as is required to become profitable to avoid ever needing to do so. If you are successful, not only will it be simpler for you to raise money in the future, but you will also be able to survive if funding becomes scarce. That being said, some firms, including those that are developing hardware, will require a follow-on round. Their objective should be to raise the amount of money required to reach their next “fundable” milestone, which will typically be reached 12 to 18 months from now.
You have to weigh several factors when deciding how much money to raise, such as the amount of advancement that money will buy, your credibility with investors, and dilution. It would be fantastic if you could just give away 10% of your business during your seed round, but most rounds will demand up to a 20% dilution, and you should attempt to stay under 25%. In any case, the amount you are requesting ought to be connected to a plausible strategy.
The credibility you need to convince investors that their money will have a chance to grow will be acquired by using that plan. It is typically a good idea to develop multiple plans anticipating various fundraising totals and to clearly state your conviction that the business will succeed whether you raise the entire amount or a lower one. The key factor will be how quickly you develop.