You say "Show me the money", but how much is enough

Will Price covers a recently popular theme in this post regarding the optimum amount of money to raise. Whilst many contend you should raise as much as you can, those with a marketing bent advise that it's better to show a path of increasing valuation in each round.

But how much is typically raised in the various rounds?

Will refers to Fewnwick's recent report on trends in venture capital which reported that the median valuations for A-D rounds were $5m, $12m, $23.5m, and $41.71m respectively.

Patterns and data suggest that for software companies an $8-10m "A" post appears to maximize the probability of a healthy B round.

What you can't ignore though is being ready with a sensible answer to the question - "So how do you plan to use this funding?".


posted by John Wilson @ 9:17 AM Permanent Link newsvine reddit


At 10:56 AM, Blogger Hawkeye said...

I don't suppose an appropriate answer to the question, "How do you plan to use the money?" is, "I plan to use most of it on fast women, slow horses, drugs and alcohol and the rest I might fritter away." This seems to indicate that a business plan with allocations of cash to steps is what you are looking for. Do I recall you saying that detailed business plans were also not desirable a while ago? Or was that someone else?


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