How Much Should a Start-up Raise for a Round of Funding? Here’s a 7-step System.

Investors value outcomes, not activities.

For start-up founders, raising money is a difficult and full-time job; but everyone knows how essential it is for launching a successful enterprise.

Skillfully and accurately knowing how much to raise for a round of funding is another issue entirely. While some founders might have a fair idea of the amount needed, others may not understand the critical elements required to go into their calculations in order to arrive at a figure. There are a variety of factors that start-up founders have to consider when making this decision and, unfortunately, there is no one-size-fits-all answer to this.

According to Eunice Ajim, “Investors value outcomes, not activities. It’s a mindset shift that [founders] need to make.” She is a tech entrepreneur, investor and founding partner of Ajim Capital, an early-stage fund investing in pre-seed and seed-stage companies that focuses on using technology to fill significant economic and infrastructure gaps for consumers and enterprises across Sub-Saharan Africa,

Below is her proposed seven-step system to determine just how much a start-up founder should raise for a round of funding.

  1. Determine your runway. How much do you need to operate for 12–18 months? Factor in the cost of:
    • Your team salaries
    • Your rent and utilities
    • Your production costs
    • Your marketing and sales expenses
    • Your contingencies
  1. Determine your milestones. What key milestones do you need to hit to become successful?
    • Launching an MVP
    • Reaching 1,000 customers or more
    • Getting a patent
    • Signing a partnership agreement
  1. Determine the cost of your milestones. What resources do you require to reach your milestones? Put into consideration the cost of:
    • Development and design of work
    • Marketing and advertising costs
    • Legal and regulatory expenses
    • Staffing and resource allocations
  1. Prioritise your milestones. What are the most important milestones that you want to achieve?
    • Which milestones would likely lead to revenue generation?
    • Which milestones are necessary for scalability?
  1. Determine how much funding is necessary for each milestone. Allocate the required resources for each milestone. Factor in the cost of:
    • Hiring additional staff
    • Developing new technologies
    • Marketing and advertising
    • Legal and regulatory expenses
  1. Consider your valuation. How much equity are you willing to give up?
    • Are you willing to accept a lower valuation for more funding?
    • Are you willing to raise less money for less equity?
  1. Communicate your plan. Present your funding plan to investors.
    • Show them how the funding will lead to specific milestones.
    • Highlight the potential for generating significant revenue.
    • Demonstrate the expertise of your team.

In the end, she cautions, “Remember, investors want to see outcomes and a clear plan for success. Use this system to create a realistic funding goal and communicate it effectively.”

Or as TechCrunch succinctly answers: Enough to hit the milestones to raise your next round of funding.

About GetFundedAfrica

GetFundedAfrica is a cloud-based technology platform specializing in developing software that helps businesses to fundraise, grow, and tell their stories. Whether you want to raise funds ranging from $100k to $50m, scale your business or share your entrepreneurial journey, sign up for free at

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