What’s the best way to raise the right amount of money?

Mike Maples Jr (Managing Partner @ FLOODGATE)
Ron Conway, Mike Maples Jr. – Angel Investing Revealed by Stanford eCorner | Free Listening on SoundCloud

Whenever I’m an entreprenuer and I raise money there’s a set of expectations I’m creating. So if I raise $5M from a VC, the option to exit for $100M or less is no longer available to me as an entreprenuer.

What’s the best way to raise the right amount of money?

Mike Maples Jr (Managing Partner @ FLOODGATE)
Ron Conway, Mike Maples Jr. – Angel Investing Revealed by Stanford eCorner | Free Listening on SoundCloud

Whenever I’m an entreprenuer and I raise money there’s a set of expectations I’m creating. So if I raise $5M from a VC, the option to exit for $100M or less is no longer available to me as an entreprenuer.

Jason Calacanis (Founder & CEO @ Inside.com)
How to select your angel round valuation (aka “the $4m rule”) — Medium

If you’re raising over one million dollars at over a four-million dollar valuation, investors in Silicon Valley are going to put on their diligence caps and put your business on the examination table and try to make an “educated decision.” If you’re raising under one million dollars at under a four-million dollar valuation, investors in Silicon Valley are going to put you in one bucket of risk I will call the “gut decision.”

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

Underestimate how much you want. Though you can focus on different plans when talking to different types of investors, you should on the whole err on the side of underestimating the amount you hope to raise. For example, if you’d like to raise $500k, it’s better to say initially that you’re trying to raise $250k. Then when you reach $150k you’re more than half done. That sends two useful signals to investors: that you’re doing well, and that they… (read more)

Jason Calacanis (Founder & CEO @ Inside.com)
How to select your angel round valuation (aka “the $4m rule”) — Medium

Have coffee with the angel you want most in your startup and ask the following question: “Cyan, can I ask you for a favor?” [they will say yes] “Would you candidly tell me at what valuation you would want to invest in my startup? I really want to hear what you think the number is. Even a range is helpful.” Do this five times and you’ll know what the right number is.

Mike Maples Jr (Managing Partner @ FLOODGATE)
Ron Conway, Mike Maples Jr. – Angel Investing Revealed by Stanford eCorner | Free Listening on SoundCloud

I believe that too much money in a startup is not only unnecessary– it’s actually toxic. It causes you to pursue losing strategies for too long to the detriment of winning strategies.

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

If you’re so fortunate as to have to think about the upper limit on what you should raise, a good rule of thumb is to multiply the number of people you want to hire times $15k times 18 months. In most startups, nearly all the costs are a function of the number of people, and $15k per month is the conventional total cost (including benefits and even office space) per person. $15k per month is high, so don’t actually spend that much.

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

Don’t raise too much. Though only a handful of startups have to worry about this, it is possible to raise too much. The dangers of raising too much are subtle but insidious. One is that it will set impossibly high expectations.

David Jackson (Founder, Seeking Alpha)
Why your VCs want you to raise a large round | A Founder’s Notebook

Since the size of a round is always proportionate to its valuation, this means it’s in your VCs’ interests to have you raise a large round. A large round has many advantages — capital can be used as an offensive strategy. But a large round is not always best for the company, the founder or the team. As Rob Go says, “modest sized rounds focus a team and establish discipline”.

Mark Suster (Managing Partner at Upfront Ventures)
What I’ve Learned About Venture Funding | Bothsides of the Table

I believe firmly in capital efficiency in the early days of a startup. It forces innovation. It forces the founder to spend time in front of customers. It forces teams not to expand too quickly.

Mark Suster (Managing Partner at Upfront Ventures)
What I’ve Learned About Venture Funding | Bothsides of the Table

I’ve seen companies who raise the mega round after they’ve truly started to scale and put scale on steroids. I’ve seen the companies that had they not raised the big round would have evaporated. How can it be that over-funding is bad, bad, bad and then the best possible outcome? And what is the inflection point? It’s subjective. I’ve seen directly just how much capital can separate the winners from the losers when raised at the right time.

Bruce Gibney (Former Partner @ Founders Fund)
Peter Thiel’s CS183: Startup – Class 8 Notes Essay

First, you need to raise the right amount of capital. A small company shouldn’t raise 100 million dollars, even if Great Late Stage Fund is very eager to cut you a check. Raising too much can haunt you. Map out your operating expenses for one year, multiply that figure by 1.5, and ask for that, as a first approximation.

Mark Suster (Managing Partner at Upfront Ventures)
Founder Showcase – Mark Suster Keynote on Vimeo

You should try to raise 18-24 months of capital.

Ryan Howard (Founder @ Practice Fusion)
Transcript: Protecting yourself as the founder; Ryan Howard | VatorNews

Don’t get so excited about the valuation that you’re throwing the baby at the bath water. I did this multiple times at Practice Fusion. I had advisors that wanted a huge valuation because as investors, it might make them look really good. Again, my ego got the best of me, but be willing, if you get a $20 million valuation, be willing to go back to that investor or someone else and go, “What if we do 10% off this and I can maintain a little more c… (read more)

Mark Suster (Managing Partner at Upfront Ventures)
What is the Right Burn Rate at a Startup Company? | Bothsides of the Table

I think every time you raise you should seek to raise 18 months cash if you can. I think you start fund raising when you have 9 months left and begin to panic if you get down below 3.