Step 1: Figure out how much you need to raise

Figuring how much you need to raise is crucial, because you may need less capital than you think. You will have a Plan A (how much you need) and Plan B (the bare minimum). Your Plan A is a function of how much you need to hit the milestones you need to get you to your next round. To do that, you need to understand the promises and the metrics you need at each round.

Notice, how the bigger the round, the simpler the promise, but the harder the metrics. Now you’ll need to know how much you actually need to get to your next round. This will be a factor of how much you need to burn to get to your next metric, plus a cushion of about 3 months. In the example below, the seed stage company is already doing $10k in monthly revenue and burning $20k, but they'll need additional engineers and marketing to get them to $100k.

Now that you have your Plan A, this is what you’ll pitch to investors. Lastly, you need your Plan B. This is your bare minimum, living-off-ramen fund. Here you won't have the luxury of hiring those engineers or spending on marketing, so your ‘new expenses may be close to zero. So the natural question will be “how do we get to your next stage with no new budget??!!” well it’ll be tough, you’ll have to be resourceful, but I can tell you that many unicorns, even decacorns have been in this same exact situation. They’ve done it and so can you.

Next: Nail your 60-second pitch.