How Much to Raise Using Crunchbase Data

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Raising capital for a shiny new start-up company is a daunting task what with shoring up interest by funding sources like Angels and VCs, producing a compelling “pitch deck,” and stacking your management team with the right people. But the big elephant in the room is always – how much to raise? Entrepreneur Jamie Davidson recently put some science (data science that is) behind this very important question. He whipped up some R scripts and used the data available over at Crunchbase to come up with a pretty good method and model to help you decide how much to raise. To check out Jamie’s analysis click HERE.

In the plot below, we get some great insight with which to base our funding decision – Percent Follow On Funding by First Round Funding Amount: How_much_to_raise

One way of thinking, as quoted in the analysis, comes from Mark Andreesen:

Raise as much as you can without giving away control of your company, and without being insane. … In a normal scenario, raising more money rather than less usually makes sense, since you are buying yourself insurance against both internal and external potential bad events.”

The analysis seems to substantiate the thesis that you should raise enough to hit the next milestones and mitigate risk with a sufficient buffer to weather the inevitable bumps.


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