The short answer. Raise what you need to hit the milestones that will let you raise the next round, plus a margin in case it slips. You work it out from the bottom up: what you'll spend each month minus what you'll bring in, over the months you need, minus the cash you already have. A round number with no calculation behind it is the first thing an investor takes apart.
What you'll learn
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Why "how much to raise" starts from milestones, not from a number.
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The five-step method, with the formula and a full worked example.
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How to present the use of funds so it convinces.
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How the amount, the valuation and dilution fit together, with Carta's data.
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Which instruments and which public funding can complement your round.
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The mistakes that make investors hesitate most.
The amount is one of the central pieces of preparing a round (How to prepare a pre-seed or seed round). And it depends on something you should have clear first: how much cash you have left. (Runway and burn rate)
Why does asking for the right amount matter so much?
Because the number you ask for says a lot about how you think. Ask for too little and the investor worries you'll run out of cash before proving anything. Ask for too much without justifying it and they'll think you don't know your business, or that you'll give away too much of the company. Ask for a round number with no explanation and they'll pick it apart in the first meeting.
What I've seen A chain of non-contact boxing gyms went after a very large round. Each site needed so much investment that the amount required shut the door on growing through franchises, the model it was built on. With no clear financial strategy, the money went on development and presentations before it ever reached trade shows and actual selling. The amount they asked for didn't fit the model, and investors saw it.
"What you ask for has to be in proportion to what you're going to prove."
How do you work out how much to raise?
In five steps, from the bottom up:
Working out your round in five steps
- what you'll prove for the next round
- what you need to do to get there
- month by month
- until the milestones, plus a margin
- cumulative net burn minus cash
1. Define the milestones for the next round
The question isn't "how much do I need?" but "what do I have to prove for the next round to be possible?" For example: a number of paying customers, a level of monthly revenue, a retention rate, a finished product or a certification. Those milestones are where the money is going.
2. Turn the milestones into a plan
For each milestone, what you need to do: hire, build, sell, certify. Every action has an owner and a timeline.
3. Estimate spend and revenue, month by month
People, product, marketing and sales, and overheads, with realistic figures, not best-case ones. Alongside, the revenue you expect each month, with cautious assumptions: if revenue comes in late, your round has to absorb it.
4. Work out how many months you need, plus a margin
The time to reach the milestones, plus the time it usually takes to close the next round, plus a cushion in case something slips. The gaps between rounds can be long: according to Carta, the median time between a seed round and a Series A reached 616 days, a little over 20 months, in the second quarter of 2025.
5. Calculate the amount
Definition The minimum size of your round is the cumulative net burn (spend minus revenue) over the months you need, minus the cash you already have.
Formula: (cumulative spend − cumulative revenue) over the months needed − current cash = minimum round size.
Round it sensibly, and explain the rounding.
Tip Prepare two scenarios: the minimum amount to reach the milestones, and the amount that would let you go faster. If the investor asks "and with less?", you already have the answer.
A full worked example (fictional figures)
| Step | Example |
|---|---|
| Milestones for the next round | 60 paying customers and €40,000 in monthly revenue |
| Plan | Hire 2 salespeople and 1 developer; campaigns in 2 markets |
| Average monthly spend under the plan | €45,000 |
| Months to the milestones | 14 |
| Margin to close the next round | 6 months |
| Total months | 20 |
| Cumulative spend over 20 months | €900,000 |
| Expected cumulative revenue over 20 months | €300,000 |
| Current cash | €150,000 |
| Minimum round size | (900,000 − 300,000) − 150,000 = €450,000 |
| Amount raised, with the rounding explained | €500,000 (a €50,000 cushion in case revenue comes in later) |
From spend to round size (fictional example)
How to read it. Forget to subtract revenue and you'll ask for too much and won't be able to explain it. Count revenue optimistically and you'll ask for too little and run out of cash before the milestone. That's why expected revenue comes with cautious assumptions and the cushion is explained.
How do you present the use of funds?
Think of the use of funds as the link between the money and what you'll achieve with it, rather than a pie chart of percentages.
Use of funds in the example
A good use of funds answers three questions:
| Question | Weak answer | Answer that convinces |
|---|---|---|
| What will you spend it on? | "Marketing and team" | "2 salespeople, 1 developer and campaigns in 2 markets" |
| What for? | "To grow" | "To reach 60 customers and €40,000 a month" |
| How long will it last? | "Quite a while" | "20 months, with 6 of margin for the next round" |
Common mistake Presenting the use of funds without tying it to milestones. Investors don't fund expenses. They fund what those expenses are going to prove.
Do it with a method Does what you're asking for fit your cash and your market? The Startup Index Score founder report analyzes your cash and your round with scenarios, and calculates the revenue needed to return the investment three, five and ten times against your market. Start free. (How the evaluation works)
How do the amount, the valuation and dilution fit together?
Definition The pre-money valuation is what the company is worth before the round; the post-money valuation is what it's worth afterwards, including the money coming in. Dilution is the share of the company the existing shareholders give up when new investors come in.
The math is simple: the new investors end up with the round amount divided by the post-money valuation.
| Round amount | Pre-money valuation | Post-money valuation | New investors' share |
|---|---|---|---|
| €500,000 | €1,500,000 | €2,000,000 | 25% |
| €500,000 | €2,000,000 | €2,500,000 | 20% |
| €750,000 | €2,000,000 | €2,750,000 | 27% |
Fictional example. Raising more at the same valuation means more dilution, which is why the amount and the valuation are negotiated together.
How much do founders get diluted in a seed round?
Carta's data on US software startups gives a reference point: median seed dilution hovered around 20% for years and drifted down to 19% so far in 2025, according to figures published in June that year. On top of that, fewer than 10% of software seed rounds in the six months before June 2025 sold 30% or more of the company.
Median dilution in seed rounds (Carta, US)
What this means in practice:
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Dilution depends on the amount and the valuation. Raising more at the same valuation dilutes more.
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Selling a very large share at seed can make later rounds harder, because it leaves founders little room for the ones that follow.
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Markets differ. US data is a reference, not a rule for Spain or Latin America. Carta also notes that hardware or biotech startups can see more dilution per round.
Is the amount different at pre-seed and at seed?
Yes, in order of magnitude and in what justifies it:
| Item | Pre-seed | Seed |
|---|---|---|
| What the money is for | Proving the problem exists and the product gets real usage | Proving the business can grow |
| Typical milestones | Product in use, first customers or pilots | Recurring revenue, retention, a channel that works |
| Who usually puts the money in | Founders, friends and family, business angels, programs | Business angels, angel networks and early-stage funds |
| What matters most in justifying it | The plan and the team | The numbers and the milestones |
In Spain, business angels invest in a very spread-out way: according to AEBAN and IESE, the median was €20,000 per investor over the whole of 2024. If your round is €300,000 or €500,000, you'll need several investors and, almost always, someone to lead. (What business angels look at)
Which instruments are used in an early round?
| Instrument | What it is | When it fits |
|---|---|---|
| Capital increase (equity) | Investors come in as shareholders at an agreed valuation | When there's agreement on the valuation |
| Convertible note (convertible loan) | A loan that converts into equity in the next round, often at a discount | When it's too early to set a valuation, or for a bridge round |
| SAFE and similar agreements | A right to receive equity in the future, without being a loan | Common in the US; used less in Spain and needs legal adaptation |
| Participating loan | A loan whose interest depends partly on how the company performs | Common in public funding (for example, ENISA in Spain) |
Tip The instrument changes what you give up and when. Before proposing one, understand how it will affect your cap table in the next round, and review it with a lawyer.
Can you raise the round in tranches?
Yes. A tranched round releases the money in two or more parts, each tied to a milestone. For the investor it lowers the risk; for you, it can make the yes easier. The flip side: if you don't hit the milestone on time, the second tranche may not come. If you propose it, define measurable milestones, realistic dates and what happens if they slip.
Which public funding can complement your round in Spain?
Public funding doesn't replace the round, but it can complement it and extend your runway without as much dilution:
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ENISA offers participating loans to innovative startups and SMEs, often conditional on shareholders or investors putting in their own funds.
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CDTI funds technology-based projects, with specific programs for young companies such as NEOTEC.
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Regional governments and other bodies have their own lines and calls.
Conditions, amounts and deadlines change with every call: check them on each body's website. If you include them in your plan, tell the investor and explain what happens if they don't come through.
What should the "ask" slide in your deck look like?
One slide, with four elements:
- The amount, and the instrument if it's already decided.
- What for: the use of funds in three or four lines.
- How far it gets you: the milestones you'll reach and in how many months.
- What comes next: the next round those milestones make possible.
Common mistake Putting just the number. The ask slide doesn't ask for money. It explains what the investor is buying with it.
Does what you're asking for fit your market?
An early-stage investor needs some of their investments to multiply several times over. That's why they run a quick calculation: what revenue would you need to return their investment three, five or ten times, and is your market big enough for that? If the math only works with an unrealistic share of the market, your ask doesn't hold together. (Does your round fit your market?)
What are the most common mistakes when deciding how much to raise?
| Mistake | Why it makes investors hesitate | What to do instead |
|---|---|---|
| A round number with no calculation | It looks improvised | Show the bottom-up calculation |
| Forgetting to subtract expected revenue | You ask for too much and can't explain it | Work out the net burn |
| Counting revenue optimistically | You run out of cash before the milestone | Cautious assumptions and an explained cushion |
| Raising for 6 months | You'll be fundraising again almost immediately | Cover milestones plus margin for the next round |
| Asking for a lot "just in case" | Too much dilution, and it can't be justified | Two scenarios: minimum and accelerated |
| Not tying spend to milestones | The investor can't see what they're buying | Use of funds tied to results |
| Copying another startup's number | Every business has its own costs | Calculate yours |
Checklist before you settle on a number
Before you give an investor a number
A guide, not a rulebook. You can print it.
In short
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Raise what you need to hit the milestones for the next round, plus a margin.
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Formula: (spend − revenue) over the months needed − current cash.
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Present the use of funds tied to what you're going to prove.
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Amount and valuation are negotiated together: both decide your dilution.
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As a reference, median seed dilution was 19% so far in 2025 in Carta's data (US).
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Public funding can complement the round with less dilution.
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Prepare two scenarios: minimum and accelerated.
Do it with a method Check whether your round fits your cash and your market. Evaluate your startup with Startup Index Score: free, in 30–40 minutes (Start the evaluation). If your round is two or three months away, you can also prepare it with Jordi Gil. (Prepare your round with Jordi Gil)
Frequently asked questions
How many months should a seed round cover? The months you need to reach the milestones for the next round, plus the time it usually takes to close it and a margin in case something slips. Gaps between rounds can be long: according to Carta, the median time between seed and Series A reached 616 days in the second quarter of 2025.
How do you calculate how much money to raise? Add up what you'll spend each month over the months you need to reach your milestones and the next round, subtract the revenue you expect in that time, using cautious assumptions, and subtract the cash you already have. The result is the minimum; explain any rounding on top.
Is it better to raise too much or too little? Neither: it's better to raise what you can justify. Raising too little forces you back into fundraising before you've proved anything; raising too much without justification dilutes you and raises doubts. Present a minimum and an accelerated scenario, each with its own calculation.
What percentage of the company do founders give up in a seed round? It depends on the amount and the valuation. As a reference, in Carta's data on US software startups, median seed dilution was 19% so far in 2025, and fewer than 10% of software seed rounds sold 30% or more. Every market is different.
How do I explain the use of funds in my pitch? Link each line item to a milestone: what you'll spend, to achieve what, and over what period. Investors don't fund expenses; they fund results. The Startup Index Score founder report analyzes your cash and your round with scenarios so you walk in with that calculation done.
Keep reading
Sources
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Carta, median dilution in seed and Series A rounds (June 2025): carta.com/data/linkedin-dilution-not-rising-vc-data/
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Carta, software seed rounds selling 30% or more (June 6, 2025): carta.com/data/linkedin-seed-dilution-30-percent-not-market-2/
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Carta, time between seed and Series A in Q2 2025 (September 2025): carta.com/data/series-a-fundraising-q2-2025
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AEBAN and IESE, "Business Angels 2025. La inversión en startups: actividad y tendencias": www.iese.edu/media/research/pdfs/78716.pdf
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The examples with figures are fictional.
About the author
Jordi Gil is the creator of Startup Index Score. He has spent almost 30 years developing projects and working with startups across the Americas, Europe and Asia. (Meet Jordi Gil)