Founders often pick a raise amount by looking at what peers announced. A better starting point is your own plan: what you need to prove next, and what it will cost to get there.

Start with the milestones

Ask what your company needs to show to raise its next round on good terms. That might be a revenue target, a usage number, a product launch or a key hire. Your round should fund the work that gets you there.

Do the runway math

Build a month-by-month budget for the plan, then add a cushion. Many investors suggest raising enough for 18 to 24 months of runway, because fundraising takes longer than expected and plans rarely go exactly to schedule.

• List your planned hires and when they start

• Add other operating costs, such as software, rent and marketing

• Total your monthly burn and multiply it by your target runway

• Add a buffer of a few months for delays

Check the dilution

Raising more isn’t free. At any given valuation, every extra dollar means selling more of your company. Look at what your round size implies for ownership, and make sure the founders keep meaningful stakes for the rounds ahead.

Be ready to explain the number

Investors will ask why you chose your amount. A clear answer that ties the money to milestones and runway is far more convincing than a round number.