Figuring out how much capital you need is one of the most important early decisions for a founder. If you raise too little, you risk running out of money before you hit meaningful milestones; if you raise too much too early, you give away more equity than necessary.
Here’s a step-by-step guide to assess your needs.
1. Define Milestones
- Why: Investors fund progress, not just survival. You need to know what goals you must achieve before your next round (or before reaching profitability).
- Examples of milestones:
- Build and launch MVP
- Acquire first 1000 users or €50K MRR
- Secure regulatory approval
- Reach break-even revenue
2. Translate Milestones into Resources
- Team needs: What roles are essential (e.g., 2 engineers, 1 designer, 1 sales)?
- Tech/ops costs: Hosting, tools, software licenses.
- Go-to-market costs: Marketing, sales efforts, customer acquisition.
- Other overhead: Legal, accounting, office (if needed).
3. Build a Financial Model
Timeframe: Usually plan for 18–24 months runway — long enough to hit milestones without being forced to raise too soon.
- Forecast expenses: Salaries, infrastructure, marketing, general and administrative expenses.
- Revenue (if any): Be conservative.
- Cash flow projection: Identify monthly burn rate and total cash required.
4. Add a Buffer
Things always cost more and take longer than expected. Add a 20–30% buffer to your projected capital needs to protect against delays or underestimation.
5. Consider Fundraising Strategy
- How much equity are you comfortable giving up? Early rounds typically dilute 10–25%.
- Investor expectations: Different investors have different check sizes (e.g., angel round vs. VC seed).
- Signalling: Asking for too little can make you look unambitious; asking for too much without justification can hurt credibility.
6. Back-Check Against Market Norms
- Compare your ask with similar startups at your stage and industry. For example:
- Pre-seed: €50-€300K
- Seed: €300K- €1.5M
- Series A: €2M–€5M
7. Align Funding Type with Business Stage & Growth Plan
| Stage | Funding Type(s) to Prioritise | Why |
| Idea/ Pre-seed | Grants, accelerators, angels, convertible notes | Too early for debt; equity/grants are realistic |
| Seed | Equity VC, angel syndicates, public co-funding (e.g. SNCI) | Build MVP, validate market; investors expect dilution |
| Early Growth | Larger VC rounds (€1M–€5M), venture debt (select cases) | Revenue starts, funding expansion; hybrid possible |
| Scale-up | Growth equity, venture debt, bank loans | Predictable revenue supports debt; equity for global expansion |
| Mature | Private equity, strategic investors, traditional loans | Lower risk profile, stable cash flow |
8. Decide on “Need vs. Nice-to-Have”
- Need-to-have capital: Minimum to achieve the next milestone credibly.
Nice-to-have capital: Additional money that accelerates growth or reduces risk but isn’t strictly required.
