How much should you raise? An economic approach

Pierre Entremont
Sep 7, 2015 · 5 min read
Getting a smaller part of a really bigger cake is usually a good deal

1) The duration that separates the current fund raising from the next one

Definition of the optimal duration between two fund raises

2) The amount the company is able to spend efficiently

A seed-stage startup
A startup well positioned for its series A
Evolution of the marginal utility of raised capital to the company

3) Offer, demand, and the entrepreneur sensitivity to dilution

Evolution of the marginal disutility of dilution to the entrepreneur

The optimal amount raised is the maximal amount which, in a given period, allows the last dollar raised to be more useful to the company than it is harmful to the entrepreneur.

Pierre Entremont

Written by

Co-founder & Partner at @frst_vc — Seed x Paris x High-conviction — pierre@frst.vc

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