How to Decide How Much Money to Raise:Milestone First
How to decide how much money to raise: pick one milestone, cost the path, add a buffer, then check the dilution for this round and the next before you accept.
To decide how much money to raise, work backwards from a milestone. Pick the one that makes your next round straightforward, cost the path honestly, add a generous buffer, and raise that amount. Then check the dilution and decide whether you accept it.
How to decide how much money to raise: start from the milestone, not the market
"Raise as much as you can."
You'll hear it everywhere. It isn't wrong for every business. But it's sold as a law when it's a trade, and you're the one paying for it.
More money means more dilution now. It also resets expectations. Raise a large first round and the next conversation needs proportionally larger evidence. You haven't just bought runway. You've raised the bar you must clear.
The other way to pick a number is "what sounds normal for my stage". That one is worse. It's how people end up over-diluted and under-milestoned at the same time: too much of the business gone, and still not enough money to reach the point that makes the next round easy.
So here's the method for how much money to raise. It takes an afternoon.
Step zero: are you raising at all?
Before any number, one question that standard advice skips and that is genuinely open for you.
Capital solves one problem: going faster than your own resources allow. It costs ownership, control and an obligation to chase an outcome big enough to justify someone else's return.
If your business can reach something good on revenue and your own hours, taking money turns it into a different business with a different required ending. That is a legitimate choice. It is not a failure of ambition to refuse it. What isn't legitimate is drifting into it because raising is what people are meant to do.
Write down, in a sentence, what the money would let you do that revenue and evenings cannot. Can't finish the sentence? You don't have a number to find yet. You have a decision to make first. Whether a solopreneur should raise money goes into that one.
Free guide · 25 pagesKnow the cost before you sign.The Dilution Playbook: what raising money actually costs you.Get the free guide →Rank what you want, because the goals fight
How much money to raise is the result of what you are optimising. And you can't maximise everything. There are at least four things you can want from a round, and they pull against each other.
| What you want | What it pushes you to do | What it costs |
|---|---|---|
| Ownership | Raise less, grow slower | Speed, and sometimes the milestone itself |
| Absolute value | Accept more dilution for capital that grows the whole faster | A smaller share, justified only if the whole really is much larger |
| Control | Fight over board composition, vetoes, who can force a decision | Often a separate axis from ownership, and frequently the more consequential one |
| Speed and certainty | Close quickly with a known party | Better terms you might have found over months you may not have |
Rank them before you start. Put them in order on paper.
People who skip this defend whichever goal is being attacked in the moment. That produces an incoherent negotiation and usually a bad trade on the one thing they cared about most. You can lose ownership gladly if you wanted speed. You can't discover that only after you've lost it.
Name the milestone, specifically
Now the real work. Which single milestone, once reached, makes the next round straightforward?
Not "growth". Not "traction". Something specific enough that you'd know on the day whether you'd hit it. The reason is blunt: a vague target makes the cost unknowable, and an unknowable cost gets filled in by whatever number sounds plausible.
Say you run a productised service and want to build a software layer on top that you can sell without delivering yourself. The milestone might be that the software layer is live and paying customers use it without you in the loop. That's an archetype, not a case study, but notice what it does. It gives you something to cost.
Once you have the milestone, everything downstream is arithmetic.
Cost the path, then pad it
List what it takes to reach the milestone. Tools, contractors, time you will buy back, anything you will stop doing yourself. Price it honestly.
Then add a meaningful buffer. The path will take longer than you think. It always does. People who skip the buffer end up raising again from a weaker position, which defeats the point of raising carefully the first time.
That total is your amount. Not a market-clearing number. Not a stage-appropriate number. Yours, with its reasoning attached.
The reasoning matters more than it looks. When an investor pushes for more, you'll have a reply that isn't a feeling. When an investor offers less, you'll know exactly what the milestone is now missing.
Then look at the bill for how much money to raise
You've got an amount. Don't fall in love with it yet. Look at what it costs.
Take the amount and the valuation on offer and work out the investor's share. It's their money divided by the post-money valuation. Everyone else keeps the same proportion of the rest, so your share is multiplied by one minus that fraction. If that arithmetic is new, pre-money vs post-money valuation explained is worth ten minutes first, because the two readings of a headline number differ by exactly the size of the round.
Now do the thing people forget. Model the round after this one too.
Dilution is a sequence. A round that looks fine alone can sit on a path you'd have rejected at the start. Reasonable-looking rounds compound into an outcome most people wouldn't accept if they'd seen it drawn out. And you can't earn ownership back by working harder. Everything else in a business compounds in your favour. This doesn't.
So the check is simple. After this round and the next, are you still above the minimum ownership you wrote down? If yes, you have your amount. If no, you have three options:
- Shrink the milestone. A smaller, nearer target costs less.
- Stage the raise. Take less now to hit an earlier milestone, then raise from a stronger position.
- Don't raise. Find another way to fund the path, or accept that it takes longer.
All three are legitimate. All three beat discovering the answer a week after closing.
Free assessmentHow trapped are you, really?Take the Corporate Suffocation Index, the free solopreneur readiness assessment.Take the assessment →Check what you've already sold
One thing can quietly wreck your sums: what you've already given away.
If you took money on convertibles, such as SAFEs or notes, you sold future equity at a price not yet set, and it doesn't appear on your table until it converts. The cap sets the maximum price at which it converts. The discount gives the holder a percentage off the round price. And they stack. Several instruments on different caps converting into the same round can produce a combined dilution far larger than the mental model of "we raised a bit on SAFEs".
So convert everything together before you settle the amount. Otherwise your tidy milestone-led number sits on top of a hole you can't see.
Don't forget the pool
Many rounds include a pool of shares reserved for future hires. Size it to your actual hiring plan for the period the round covers: list the roles you really intend to hire, estimate the equity each needs, add it up. That total is often smaller than the figure you'll be asked for.
Know too whether it is created before the money arrives or after. Before means you alone pay for it. After means everyone shares it. It's the same pool in the same document, and it can cost you very different amounts. What an option pool is and why it matters has the detail.
It belongs in this decision because a larger pool is a bigger bill for a given amount raised. It all has to fit under the line you drew.
Free guide · 25 pagesKnow the cost before you sign.The Dilution Playbook: what raising money actually costs you.Get the free guide →A rule for Monday
Do three things this week, in order.
- Write the milestone in one sentence a stranger could check.
- Cost the path, add the buffer, and write the amount.
- Run the dilution for this round and the next, and compare it to your written minimum.
If the numbers fail your own test, the right answer isn't a smaller conscience. It's a different plan.
And use the model for what it's good at. It can't forecast your exit. It compares options: raising now against later, a bigger round against a smaller one, raising against not raising. Relative answers are reliable. Absolute predictions are theatre. If you want the routine for pressure-testing an actual offer, how to model an investment offer before you respond is the next step.
Free assessmentHow trapped are you, really?Take the Corporate Suffocation Index, the free solopreneur readiness assessment.Take the assessment →Frequently asked questions
Should I always raise as much as I can?
No. How much money to raise is a trade, not a rule, and the biggest number suits only some businesses. More money means more dilution now and higher expectations for the next round, which will need proportionally larger evidence.
How do I know which milestone to pick?
Choose the one that, once reached, makes your next round straightforward. It should be specific enough that you could say on a given day whether you have hit it, so that you can cost the route to it.
How much buffer should I add?
A meaningful one, because the path takes longer than you think. The guide gives no fixed figure, so decide it from your own costed plan and be honest about where the plan is optimistic.
What if the dilution is too high for the amount I need?
Shrink the milestone, stage the raise into smaller steps, or look for another way to fund the path. Any of those beats accepting a round that leaves you under the ownership you wrote down.
The full method, with the checklists, is in The Dilution Playbook, a free 25-page playbook.
How trapped are you, really?
Take the Corporate Suffocation Index, the free solopreneur readiness assessment.