Building a custom fundraising plan for your startup

Shape your startup's future with a tailored fundraising plan: Aim for key milestones with minimal equity loss, ensuring sustainable growth.

Mar 21, 2024
Building a custom fundraising plan for your startup

Step-by-step process to create the perfect fundraising plan.

Building a custom fundraising plan for your startup

Creating an effective fundraising strategy is essential for startup founders. The key is to focus on raising just enough capital to achieve your next significant milestone without giving away too much equity. This approach, which emphasizes maintaining a lean operation and prioritizing product development over rapid expansion, sets the stage for better leverage in future fundraising. Here's how to build a custom fundraising plan:


  • Key principle: Successful founders debunk common fundraising myths and adopt simple, milestone-focused fundraising strategies.
  • Focus: Raise necessary funds to reach the next key milestone, keeping equity dilution minimal.

Benchmarks for fundraising

  • Software companies: Aim for 10-15% dilution in funding rounds. Maintain a monthly burn rate of less than $50K while seeking product-market fit, growing the team in tandem with revenue.
  • Capital-Intensive companies: Hard-tech, hardware, and biotech firms may need to dilute more than 15% to achieve necessary milestones for future funding.

Calculating Your fundraising needs

  • Common mistake: Ignoring revenue when determining fundraising needs.
  • Burn Rate Focus: Calculate the amount to raise based on the difference between total expenses and revenue.

Your custom fundraising plan

Cockroach plan:
  • Objective: Identify the minimum raise required for survival, ideally around $500K.
  • Focus: Calculate the cash burn needed to reach a key performance indicator (KPI) that enables seed funding within 8-12 months.
Success plan:
  • Goal: Raise enough funds for the lowest possible dilution, targeting 10-15%.
  • Amount: For most software companies, this ranges between $1-3 million.
High dilution plan:
  • Context: Raising over $3 million typically involves higher dilution.
  • Scenario: Justifiable when a Series A investor is interested in an early investment or when your business demands more capital.
Series A path:
  • Consideration: A $5-10 million investment pre-product market fit may result in 15-20% ownership.
  • Caution: Be wary of overconfidence in securing Series A funding.
$3M+ Fundraise path:
  • Strategy: Split the raise into two tranches for potentially less dilution.
  • Approach: Set an achievable cap for the first half, then target a higher valuation for the second half.

Discussing your plan with investors

  • Communication: Avoid detailing your multiple plans. Instead, focus on the Success Plan figure when discussing fundraising amounts with investors.

In summary, a well-thought-out fundraising plan tailored to your startup's specific needs and milestones is crucial. By understanding how much you need to raise and structuring your fundraising approach accordingly, you can maintain control and minimize dilution while positioning your company for success.

With CapitalxAI, complete startup fundraising with minimum dilution and maximum impact!!
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