Article · 15 min read

Determining How Much to Raise

Holloway (Andy Sparks et al.) · The Holloway Guide to Raising Venture Capital Free Intermediate

This is the sharpest framing of why your ask is really a bet on the next valuation step. It introduces 'accretive milestones' and 'clearing the valuation hurdle': ask whether the milestones this round buys will let you raise the next round at roughly double the valuation. That single test forces your use-of-funds slide to map spend to value creation instead of listing cost buckets.

  • Every line of your use of funds should be an accretive milestone: if you hit your goals, can you raise the next round at a much higher valuation than today's post-money
  • 'Clearing the valuation hurdle' is the real job of the round, so size the raise to the progress needed to justify the next markup, not to a comfortable runway
  • Investors like Fred Wilson and Mark Suster converge on 18 to 24 months of operating runway, giving you a defensible band to anchor the amount
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The question it answers

  1. How do I present my ask and use of funds so it does not sound like a random number?

Read with it

  1. The canonical, no-nonsense overview of how seed fundraising works, written by a former YC president who has seen thousands of... Y Combinator Startup Library Article · 20 min read A Guide to Seed Fundraising Geoff Ralston
  2. The cleanest milestone-based runway framework we found: raise for 18 to 24 months because fundraising itself burns about 6... NYU Entrepreneurship Article · 10 min read The Runway Equation: How Much to Raise and When to Spend It NYU Entrepreneurial Institute
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