Thread by @lpolovets

1/ A few key levers for deciding how much venture capital to raise:

- can your current valuation support the amount you're raising?
- what set of milestones can you hit, and will hitting them 3x+ your valuation?
- is the money you're raising sufficient to hit those milestones?

2/ These three levers have to work in unison. I.e. you need to raise enough to hit meaningful milestones, while not asking for so much capital relative to existing progress that investors will walk away.

Below are a few common issues founders encounter when picking a round size.

3/ Common issue #1: the amount you're asking for is divorced from what investors will give you based on progress so far. ("We incorporated this month, and we need about $10m to get started.")

4/ Common issue #2: your target milestones aren't meaningful.

<50% of companies reach the next funding round, so if hitting your targets will yield a 2x higher valuation then investors will just wait until the next round. But if you have a 50% chance to 3x+, that's appealing.

5/ Common issue #3: not raising enough to hit your milestones.

If you describe a plan that clearly needs 10-15 people working for a few years, but you're only raising $750k, then investors will be reluctant to move forward because your plans are unrealistic.

6/ Common issue #4: imprecise fundraising ask. If you have a concrete plan, don't say you're raising $2m-$4m. You either need $2m, or you need $4m. Having different plans for different round sizes is ok, but don't pitch a large $ range if you're committed to a single plan.