How much to invest or raise?

Oleh: Can
September 21, 2012

We receive business proposals of various levels of detail.  I don’t think there is an optimum level as it is hard to determine all the details for every business.  However, one important detail that one looks for is where the money will be spent.  

Surprisingly and more often than one would wish, we are faced with a requested check amount and no detail on how that amount was calculated.

Start-up business plans will of course change once the rubber hits the road.  But it is important for any business to start with enough fuel to make it until the next stop.  And that stop is different for each company but it usually means where the business has a well developed product, a solid growing customer base, and ideally some revenue, all with lots of promising hints to attract the next round of investor.  Entrepreneurs should decide where that next stop will be and what milestones to be achieved by that stop and how the funds that they are seeking in the current round will be spent to deliver those milestones.

It’s important to start.  But if you are embarking on a fundraising round; angel, seed or even later stages, and have accepted to spend all that time and effort, you might as well aim to raise all the funds you need until your projected refuel at your next stop.  It is also important for investors to ensure, at least as best as they can,  that all the required fuel is there to make it to the next round of financing.

It takes a lot more to find a gas station when you are stuck in the middle of the road.

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