Startup Fundraising 101: Should You Raise, When to Raise and How Much?

Most startups need outside capital to launch or grow but raising funds isn't just about needing money. At CapBridgeAI, we work with founders to approach fundraising strategically. Here’s what you need to know:

💡 Should You Raise Funding?
Ask yourself why you need capital. If you’re building a high-growth, scalable, platform-based business with plans to exit, then angel or VC funding may be right for you.

✔️ Large addressable market?
✔️ Recurring revenue model?
✔️ Product and market validation?
✔️ Willing to sell the business in 5–7 years?

If not, consider other options like SBA loans or revenue-based funding. Remember: investors expect ~5x return in ~5 years.

⏱️ When Should You Raise?

Founders often raise too early—before they're ready. Before launching a round, make sure you have:

✅ A clearly articulated, compelling idea
✅ A validated product, market, and customer segment
✅ A demo or MVP
✅ Investor-ready documents (deck, data room, traction)
✅ Customer engagement and/or early revenue
✅ A strategy for mitigating investor-identified risks
And never show up to an investor meeting empty-handed—always bring updates, even if it’s just customer insights.

💰 How Much Should You Raise?

Start with the total capital needed to reach cash flow positive—then break it into milestones.
💸 Pre-Seed: ~$250K
💸 Seed: $500K–$750K
💸 Series A: $1M–$5M

Each round typically costs ~20% equity.

Raising too much upfront can mean giving up more ownership than necessary. Raise just enough to hit your next milestone when your valuation will be higher.

🧭 Milestone the Raise
Don’t try to raise everything in one round-it’s tempting, but it’s expensive in equity.

Instead, raise in stages. For example:

🔹 Seed: $500K
🔹 Seed+ (next year): $500K
Same terms. More traction. Easier close.

A good rule of thumb:
➡️ $1M takes ~1 year to raise
➡️ $500K takes ~6 months

Fundraising will be a full-time job but only temporarily if you plan it right.