How can you determine the best amount of funding to request from angel investors and VCs?

1 Understand your funding needs

The first step to determine the best amount of funding to request is to understand your funding needs. This means calculating your current and projected expenses, revenues, and cash flow. You should also factor in your growth rate, market size, and competitive advantage. Your funding needs should reflect your realistic and achievable goals, not your wishful thinking or inflated projections. You should also consider your runway, which is the amount of time you can operate with your current funds before running out of money. Ideally, you should aim for a runway of 12 to 18 months after raising funds.

3 Validate your valuation

The third step to determine the best amount of funding to request is to validate your valuation. This means estimating the value of your company based on various methods and benchmarks. You can use different approaches, such as revenue multiples, discounted cash flow, or comparables, to calculate your valuation. You can also use online tools, such as Startup Valuation Calculator or EquityNet, to get a rough idea. However, you should also be aware of the market conditions, industry trends, and investor sentiment that can affect your valuation. You should also be prepared to negotiate and justify your valuation with evidence and data.

4 Plan your funding strategy

The fourth step to determine the best amount of funding to request is to plan your funding strategy. This means deciding how much equity you are willing to give up, how much control you want to retain, and how much dilution you can accept. You should also consider the timing, structure, and terms of your funding round. You should think about whether you want to raise a single or multiple rounds, a seed or a series A, and a convertible note or a priced round. You should also weigh the pros and cons of different types of investors, such as angels, VCs, or crowdfunding platforms.

6 Be flexible and realistic

The sixth and final step to determine the best amount of funding to request is to be flexible and realistic. This means being open to different options, scenarios, and outcomes. You should also be ready to adapt and pivot your business model, product, and strategy if needed. You should also be honest and transparent with your investors and yourself about your strengths, weaknesses, opportunities, and risks. You should also be humble and respectful, and avoid being arrogant or greedy. By being flexible and realistic, you can build trust and rapport with your investors, and secure the best deal for your startup.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?