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How much to raise
Size a round from the plan, not from a headline: what it costs to reach the milestones that justify the next round, plus a buffer for delays.
"How much should we raise?" is best answered from the plan, not from what others raised: work out what it costs to reach the milestones that will justify the next round, then add a buffer for delays. YC's SAFE guide puts the investor's version of the question plainly: what progress is this round meant to finance, over what period, and how much capital will that require? This planner turns a hiring plan, other costs and revenue into that number, and shows the dilution at a given valuation. It runs in your browser; nothing is sent anywhere.
At a $10 million post-money valuation (or post-money SAFE cap), raising $1.75 million sells 17.5% of the company.
Turn on JavaScript to edit the plan; the example is explained below.
The default plan, month by month
A team costing $30,000 a month, $9,000 of other costs, $8,000 of monthly revenue growing 7% a month, and four hires over the first nine months. The next milestone is 18 months away, with a 6-month buffer.
| Month | Costs | Revenue | Net burn | Cumulative |
|---|---|---|---|---|
| 1 | $39,000 | $8,000 | $31,000 | $31,000 |
| 3 | $55,000 | $9,159 | $45,841 | $123,281 |
| 6 | $79,000 | $11,220 | $67,780 | $306,774 |
| 9 | $93,000 | $13,745 | $79,255 | $519,176 |
| 12 | $93,000 | $16,839 | $76,161 | $750,892 |
| 15 | $93,000 | $20,628 | $72,372 | $971,968 |
| 18 | $93,000 | $25,271 | $67,729 | $1,180,008 |
Cumulative net burn to month 18 is $1,180,008. The buffer is 6 months of the month-18 burn ($67,729 × 6 = $406,377), for a total of $1,586,385, rounded up to $1.75 million.
Why a buffer, and why base it on the final burn
Raising the next round takes months, and it should start while there is still runway left; the company keeps spending at its new, higher rate the whole time. Plans also slip: hires start late, sales cycles run long. Basing the buffer on the burn at the milestone, not today's burn, reflects what the company will actually be spending when it needs the money.
Check the answer against dilution
- Divide the raise by the post-money valuation (or post-money SAFE cap): that is the share of the company you are selling.
- If the share is uncomfortably large, the options are a closer first milestone, a smaller team, or a higher valuation, not a smaller buffer.
- Remember the next round's option pool and any SAFEs still outstanding; the cap-table simulator shows the combined effect.
- Raising much more than the plan needs is not free either: it costs ownership now and can set a valuation the next round must beat.
What a milestone should be at each stage is covered in pre-seed, seed and Series A.
Sources
- Post-Money Safe User Guide, Y Combinator. Cited for facts; not reproduced.