Breaking Down Startup Fundraising: Timing, Targets, and Investor Dynamics

Raising funds is one of the most crucial steps in building a startup, but it can often feel overwhelming. Securing capital isn’t just about keeping your business afloat—it’s about crafting a roadmap for sustainable growth and setting your company up to thrive.

To stand out in a competitive market, you need a fundraising strategy that aligns your goals, runway, and valuation while capturing investor attention. In this guide, we’ll break down the essentials—when to raise, how much to target, and how to plan your runway—to give your startup the edge it needs to grow.

When and How Much to Raise

The first questions every founder faces when fundraising are deceptively simple: When should I raise? and How much do I need? The answers, however, depend on your startup’s stage, goals, and the milestones you need to reach to attract your next round of funding. Let’s start with a look at the the pre-seed round.

Pre-Seed Round

Every startup journey starts with the pre-seed round—the stage where a bold idea begins to take shape. This is often funded by angel investors, whose flexibility and risk tolerance make them ideal partners. Some VCs are dipping into pre-seed investments, but it’s typically more strategic to reserve VC involvement for later rounds when scaling becomes the focus.

Usually, this round raises anywhere from €10,000 to €1 million. The goal here isn’t just to secure funding—it’s to prove your concept, refine your offering, and position yourself for the next stage of growth. With the right backing, a strong pre-seed round can lay the groundwork for everything that follows.

Seed Round

By the time a startup reaches the seed stage, it’s expected to have a clear path to product-market fit—or be very close to it. Early revenue may already be trickling in, demonstrating traction. Startups typically raise between €300,000 and €5 million at this stage, often through a mix of angel investors and venture capital firms.

To determine your target funding amount, consider these factors:

• Plan for 18 months of runway: This gives you enough time to hit key milestones without being caught in a cycle of constant fundraising, while also limiting over-dilution at lower valuations.
• Fund your next milestone: If the pre-seed stage was about validating your product, the seed stage is about driving growth metrics to make your case for a strong Series A round.
• Evaluate market conditions: In favourable markets, raising slightly more can extend your runway, but be cautious of over-dilution, especially if valuations are still modest.

When to Start Raising

Once you know how much funding your startup needs, the next big question is when to start fundraising. Timing is everything, and while you can technically start as soon as your pitch deck is ready, preparation and strategy can significantly impact your success. Jumping into fundraising without laying the right groundwork can leave you scrambling, but a little foresight can make all the difference.

Before you officially launch your fundraising efforts, here’s how to set yourself up for success:

• Engage in “Casual Dating”: Research suggests that talking to investors informally before you officially start fundraising can boost your results. Share your pitch deck and seek advice, framing the conversation as exploratory rather than a formal pitch. This approach helps build relationships and may accelerate your fundraising later.
• Understand Industry Metrics: Investors expect you to know the numbers that matter in your industry. Familiarise yourself with benchmarks like customer acquisition costs (CAC), lifetime value (LTV), or churn rates—whatever applies to your business. Speaking their language and showing you’ve done your homework makes your pitch more credible and compelling.
• Seek Feedback: Before taking your pitch deck to investors, test it with a wide audience. At EWOR, we recommend sharing it with at least 50 people who aren’t investors to get honest feedback on clarity and messaging. The goal is to ensure your pitch resonates even with those who don’t have deep industry knowledge. If they can grasp your idea, investors are more likely to buy into it.

Once you’ve laid this groundwork, move to the outreach phase. Use a CRM system to track investor conversations and stay organised—an approach we’ll explore further later. Remember, you can start raising funds at any stage, but earlier rounds often come with lower valuations, so weigh the timing carefully.

Runway Planning

Determining how much capital to raise is yet another critical part of fundraising. Investors expect a clear, actionable plan that balances ambition with practicality. A commonly recommended benchmark is to aim for an 18-month runway. This timeframe provides the flexibility to grow and achieve key milestones without getting caught in a constant cycle of fundraising.

For instance, a shorter runway of 12 months might reduce dilution but leaves little time to focus on development before needing to raise funds again. Conversely, raising for 24–36 months offers breathing room but can lead to significant dilution, which may be costly at early-stage valuations. Striking the right balance ensures you have enough resources to grow while maintaining long-term equity efficiency.

In any case, we recommend starting by calculating both the minimum and maximum amounts you’ll need and then finding a middle ground. 

• Minimum: Covers essential costs, such as wages, computing power, and other basics needed to reach your next milestone.
• Maximum: Accounts for additional expenses, like marketing, hiring, or tools, to hit multiple milestones.

Once you’ve established these limits, find a middle ground that balances ambition and efficiency. For instance, if your range is €800k to €1.2M, targeting €1M ensures you have enough runway to grow while minimising unnecessary dilution.

Timeline Strategy

Fundraising isn’t a one-size-fits-all process. Where your startup stands—whether you’re pitching a concept, showcasing an MVP, or scaling revenue—shapes everything, from your narrative to your valuation. Investors expect different things depending on your stage, and aligning your strategy with your progress strengthens your pitch and helps secure the right funding partners.

Here’s how to approach fundraising at four key stages:

The Pitch Deck Stage: Selling the Vision

At the earliest stage, when all you have is a pitch deck, your focus is on selling the dream. This round is all about convincing investors of your bold vision and showing them the massive market opportunity your startup aims to capture.

• Founder-market fit: Showcase why you and your team are uniquely qualified to solve this problem.
• Trending topics: Highlight how your startup aligns with emerging trends or innovations to spark interest.

Since startups at this stage usually lack traction, valuations tend to be lower. This approach often suits ventures with large capital needs, such as deep tech or hardware, where execution is capital-intensive.

The MVP Stage: Showcasing Potential

At the MVP stage, you have a tangible product, even if traction is still limited. Investors here are betting on your ability to refine the product and acquire users. Your pitch should:

• Focus on efficiency: Explain how funding will be used to test the MVP with real users or bring it to market.
• Highlight early interest: Even minimal user feedback or beta engagement can strengthen your case.

While valuations at this stage are higher than the pitch deck stage, waiting until you can demonstrate traction may yield better outcomes.

The Post-Launch Stage: Driving Traction

This is often the sweet spot for fundraising. By now, you’ve launched your product and have tangible traction—whether it’s early adopters, a growing waitlist, or beta users. Investors feel more confident, and you can command a higher valuation. At this stage:

• Emphasise traction: Use your growth numbers to show potential and reduce perceived risks.
• Leverage FOMO: Create urgency among investors by demonstrating momentum and positioning your round as an unmissable opportunity.

Raising funds at this stage while pre-revenue allows you to sidestep revenue-based valuation multiples, keeping the focus on your growth story instead.

The Post-Revenue Stage: Metrics Take the Lead

At the post-revenue stage, it’s all about the numbers. With recurring revenue and paying customers, your pitch must focus on the metrics investors care about most.

• Show the data: Present a clear picture of your revenue streams and how additional funding will drive scalability.
• Navigate scrutiny: Investors may use industry-standard multiples to assess your valuation, making it critical to know your metrics inside and out.

This stage offers strong valuation potential, but the process can be data-intensive. If possible, consider raising pre-revenue to maintain flexibility.

How Long to Spend Capital

How long you spend raising capital is just as important as how much you raise. For this, you will likely approach with the crunch raise or a rolling raise. Each has its merits, but blending them can dilute your efforts and confuse investors. Committing to one approach and executing it well is critical.

Crunch Raise

The crunch raise is an intense, short-term effort designed to secure funding within two weeks to a month. It consists of three phases:

1. Preparation Phase: Spend at least a month refining your pitch, perfecting your deck, and organising your data room.
2. Call Phase: Begin with practice pitches to less critical investors, then focus exclusively on top-tier VCs and angels during the second week.
3. Closing Phase: Use the final weeks to negotiate terms, follow up, and finalise deals.

This concentrated timeline creates urgency among investors, encouraging competitive bidding and higher valuations. While ideal for angels who make swift decisions, the crunch raise may be less effective for VCs, who often require more time for due diligence.

Rolling Raise

The rolling raise offers a more flexible, ongoing approach. Instead of announcing a formal round, you engage with investors as opportunities arise, extending offers when there’s a strong fit. To maintain urgency, set a clear valuation cap; investors are more likely to act promptly if they know future caps will increase. Rolling raises can also be conducted in tranches, where you raise funds in stages with progressively higher valuation caps. This approach allows for continuous learning and adaptation, making it particularly suited to balancing fundraising with other startup priorities.

Choosing the right strategy depends on your goals. If you need to secure funding quickly and generate momentum, the crunch raise is a strong choice. For those looking for flexibility and ongoing investor engagement, the rolling raise offers a slower-paced alternative. The key is to commit fully to your chosen approach and execute it with focus and clarity.

That’s a Wrap

Fundraising is both an art and a science, requiring strategy, preparation, and adaptability. By aligning your goals with market dynamics, understanding investor expectations, and choosing the right fundraising approach, you can secure the resources your startup needs to thrive.

Whether you pursue a crunch raise to build urgency or a rolling raise for flexibility, the key is to plan carefully, stay adaptable, and always aim to showcase the unique value your startup brings to the table.

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