How much should you actually raise on your first round?

The most common mistake first-time founders make is raising the wrong amount. Here's a practical framework for getting it right.

The first question in almost every founder call I take is some version of: “How much should I raise?”

It sounds simple. It’s not. Get it wrong and you either run out of money before you hit your next milestone, or you give away too much equity too early. Both are painful. Here’s how to think through it.

The 18–24 month rule

Your raise should give you 18–24 months of runway. Not 12, not 36. Eighteen to twenty-four.

Why? Because 12 months is too short — by the time you close the round and get the money, you’ve got 8–10 months left, which isn’t enough to hit meaningful milestones and start raising the next round. And 36 months means you either raised at a low valuation (diluting yourself too much) or you’re sitting on cash you don’t need, which creates its own problems.

Eighteen to twenty-four months hits the sweet spot: enough time to build, ship, and prove something, while keeping the round tight enough that your valuation makes sense.

Work backward from your milestone

Here’s the actual framework:

Define your next milestone — What does success look like in 18–24 months? First 10 customers? $100k ARR? A working prototype with 1,000 users? Be specific. This milestone should be the thing that makes your next round easy to raise.
Build your cost model — List every expense to get there: team salaries (including yourself, if you’re paying yourself), infrastructure, marketing, tools, legal. Be honest. Add 20% for surprises.
Add a buffer — At minimum, include 3 months of buffer beyond your target milestone. Fundraising takes longer than you think. Investors need time. Things go sideways.
That’s your number.

A worked example

Let’s say you’re a two-person team building a B2B SaaS tool. Your milestone: $10k MRR with 20 paying customers in 18 months.

Founder 1 salary: $6,000/mo x 18 = $108,000
Founder 2 salary: $6,000/mo x 18 = $108,000
Engineering/infrastructure: $2,000/mo x 18 = $36,000
Marketing and sales: $1,500/mo x 18 = $27,000
Legal, tools, misc: $15,000

Total: $294,000. Add 20% buffer: ~$350,000.

You’re raising $350–400k pre-seed. That’s a real number, not a guess.

What founders get wrong

The most common mistake is picking a round size based on what sounds right — “$500k” or “$1M” — without knowing what it buys. Investors will always ask: “What does this money get you to?” If you can’t answer that in concrete terms (milestone, timeline, key hires), you haven’t done the work.

The second mistake is over-optimizing for minimizing dilution. Yes, raising less means giving up less equity. But if you raise too little and have to come back to the market in 9 months with nothing to show, you’ll dilute yourself much worse. Raise enough to hit something real.

One more thing

Before you land on your number, sanity-check the implied valuation. If you’re raising $500k on a $2M pre-money valuation, that’s 20% dilution. If you’re raising $500k on a $5M pre-money, that’s 9%. Both can be fine — but you need to know what your valuation needs to be to make the raise make sense, and whether investors in your space will find it credible.

That’s a longer conversation — one we can work through together.

Have questions about your specific raise? Book a free 30-min founder call — no deck required. I’ll tell you straight what makes sense for your situation.