Fundraising: Why Raise Seed Money, When to Raise Money, and How Much to Raise

Raising money is critical to fuel growth, build credibility, and stay afloat. Without external funding, the vast majority of startups won't survive or have very slow growth. The amount of money needed to take a startup to the next stage of growth is usually beyond the ability of founders and their friends and family to finance. Here is why, when, and how much to raise in order to succeed.

This article is a second part of the series "Startup fundraising 101" - a resource that has been created in order to help all founders in their fundraising journey. Read the first article "Fundraising: What to expect  from the journey? Stages of startup funding" here.



The investor backing the world's most driven founders, from day zero to greatness. Enabling thousands of founders every year to launch and scale companies that move the world forward.

Why raise seed money?

There has been this perception that raising a lot of money very fast equates success. Actually, this is far from being true. The best money you can raise is the money you can generate yourself. The problem with this is that until you self generate enough money to sustain the growth of your startup, you are going to need to raise additional funding.

Some startups are able to successfully bootstrap (self-fund) themselves, but they are the exception. Of course, there are lots of great companies that don't aspire to rapid growth and thus do not traditionally fit the VC model. Having said that, if you can bootstrap your business, you should. You should defer raising capital for as long as possible - make as much progress as you can with the least amount of money.

Cash not only allows startups to live and grow, but it can be a competitive advantage (see reasons below). Thus, most startups will almost certainly want to raise money. The good news is that there are lots of investors hoping to invest in the right startup, with the aspirations of hitting one or two winners. The bad news is that the fundraising journey is not quick and easy. The process of raising money is often long, arduous, complex, and ego-deflating.

Why raise money? Because it is critical to:

  • fuel growth ( international expansion, speeding up product roadmap, etc),
  • build credibility (hiring team members, closing large customers, PR, word of mouth marketing)
  • attract top talent with expertise and network
  • speed up your sales by investing in marketing and PR
  • gain access to your investors' networks (helpful for business development, support with key hires, introduction to next round investors)
  • and above all, to stay afloat.
  • Raising money in light of the global pandemic

    In recent months, perception in the funding environment has changed significantly. Coming into 2020, VC funds were sitting on more dry powder than ever before. However, with COVID-19 now being a global pandemic, VCs are increasingly looking at how they allocate further funding to support their portfolio companies.

    VCs are still looking at many early-stage deals, as they are often investing  for the long haul, but maybe slower to make a decision/execute. It is believed, based on previous "Black Swan" events, that funding this year will still be significantly easier than next year due to the amount of dry powder in the VC ecosystem. However, a potential rebound is possible as cheap capital comes into the market, looking for better returns than interest rates.

    A significant portion of the Angel community is likely to retreat as they no longer have "play money" and will be more risk-averse. However, the best companies and most exciting opportunities will always get funded!

    When to raise seed money?

    You need to start thinking about your fundraising strategy today and execute it once you actually need to fundraise. However, currently due to the global pandemic, it is recommended to start even earlier as the fundraising process can take longer than usual. A very good practice worth implementing is setting aside time for networking before you need to raise money.

    Investors write checks when the idea they hear is compelling when they are persuaded that the team of founders can realize its vision and that the opportunity described is real and sufficiently large. When founders are ready to tell this story, they can raise money. For some founders, it is enough to have a good story and a reputation. For most, however, it will require proven traction. Luckily, the software development ecosystem today allows us to build and deliver sophisticated web or mobile products in a remarkably short period of time at a very low cost. Learn more about the "no-code" movement here.

    Needless to say, investors need persuading. Usually, a product they can see is not enough. They will want to know that there is a product-market fit and that the product is experiencing actual growth. Therefore, founders should raise money when they have know exactly what the market opportunity is, who the customer is, and when they have delivered a product that matches their needs and is being adopted at an interestingly rapid rate.

    How much to raise in a seed round?

    Founders raise funding in order to hit specific milestones, and they need to raise enough capital to do so, with some buffer to account for delays. While the press loves to talk about gigantic fundraises, smart founders raise enough  to succeed, and not more. Your goal should be to raise as much money as needed  to get to your next "fundable" milestone, which in the pre-seed stage will  usually be 6 to 12 months later (18 months for subsequent rounds). Don't think in terms of "maximum amount with a buffer just to make sure I get there", but in terms of "minimum amount to get there".

    There are usually two scenarios. The first option is to fundraise just a little bit from angel investors so it gets you to the point where you can get a larger seed round. If you try too early without enough traction, you might struggle and experience more dilution (i.e. dilution is when you make a company's shares less valuable by making more shares available). For this reason, raising a small round of angel money that you put in the form of a convertible instrument (that can be converted into different security) can be a great way to go. The second strategy is to spend most of the time on small tickets and angel money, and the rest of the time focus on slowly approaching VCs. With VCs, it's either:

  • too early, and then you should keep them warm and excited about the idea by sending them monthly updates,
  • or they say "yes, let's talk",
  • or they say "no" but at least it's a "no" (read more about getting a "no" in the previous article).
  • One way to look at the optimal amount to raise in your first round is to decide how many months of operation you want to fund. Understanding your monthly cash burn and map out your company's important timelines and the cash you will realistically require to achieve them. Your plan should include all the costs for it (e.g. marketing spent, salaries, etc). It can also be a good idea to reach out to investors you already know or who are from the same sector to see how much they think you need based on their experience and if your figure makes sense for your industry. Try and raise enough money so that you have time to go fundraising after you've accomplished your next key milestone(s). Add at least 6 months to the amount of money you need for your next milestone to include time to go fundraising.

    In light of Covid-19, we would suggest creating two paths of how much to raise:

    (1) What would you ideally be aiming for in more normal times to give you 18 months of a runway?

    (2) What a scaled back minimal path looks like? Again, for 18 months cash runway (the amount you need to support the operations of the business). Better to be conservative here i.e. raise more than you think you need (balancing dilution) if you have the opportunity.


    This article is a part of the "Startup fundraising 101" series. Read also:

    Article 1 - Fundraising: what to expect in the journey? Stages of startup funding

    Article 2 - Fundraising: why raise seed money, when to raise money, and how much to raise?

    Article 3 - Fundraising: how to set your valuation and which financing options to choose

    Article 4 - Fundraising: types of investors when raising money for your startup

    Article 5 - Fundraising: how to successfully fundraise from pre-seed to seed round

    Also read: Fundraising in time of crisis: More advice for startup founders from Antler's Jussi Salovaara

    Subscribe to our newsletter

    Get the latest news and views from Antler’s global community

    Thank you! Your submission has been received!
    Oops! Something went wrong while submitting the form.

    Must-read articles from Antler

    Browse our collection of founder stories, industry insights and latest startup successes from Antler Australia

    See articles
    5 min read
    Introducing Canada's Next Big Thing: A blueprint for future entrepreneurs

    Exciting news for entrepreneurs ready to leave their mark: We've launched a pivotal initiative that spotlights the diverse opportunities within Canada's thriving industries.

    Our report curates pivotal problem statements from Canada's leading tech visionaries, founders, and VCs, offering aspiring entrepreneurs a pathway to impactful innovation.

    Discover 20+ big opportunities pinpointed by top Canadian minds, spread across six fast-growing industries. Each challenge is an invitation to create and innovate—leading the way to the future.

    We hope it will serve as a roadmap for aspiring founders ready to build tomorrow's solutions today.

    5 min read
    Invest in women: fast-track progress

    Making progress a certainty—our north star goal at Antler—can’t happen if driven and visionary people aren’t firing at all cylinders with the support they need to tackle the pressing problems of our time. We’re marking International Women’s Day by asking women founders and team members in Antler’s global community why women are essential to progress.

    5 min read
    How to secure venture capital as an underrepresented founder

    There is growing recognition that diverse founders and diverse teams generate more innovative solutions, ultimately building stronger businesses in the long run. Read Antler in the UK portfolio director Sarah Finegan's recent article in Startups Magazine, offering 10 tips on securing venture capital as an underrepresented founder.

    5 min read
    From day zero to greatness: Magnus Grimeland on the Capital Allocators podcast

    How can the world tackle the increasingly complex problems of our time? With a new global infrastructure backing the most driven founders. Listen to Antler founder and CEO Magnus Grimeland discuss this—and why we're building Antler—on the Capital Allocators podcast.

    5 min read
    Antler expands into Queensland, Australia

    Antler is charting a new course for innovation by expanding our presence in Australia. We are launching in Queensland and partnering with the Queensland Investment Corporation (QIC).

    Supported by the Queensland Government's Queensland Venture Capital Development Fund (QVCDF), the partnership is poised to transform the state's innovation sector. With a focus on bridging the early-stage funding gap, Antler and QIC are committed to attracting and nurturing the nation's top talent, driving forward Queensland's position on the global innovation stage.

    5 min read
    Bridging startups and industry leaders to drive purposeful innovation

    As Jeff Bezos once said: “What’s dangerous is to not evolve.” While most business leaders understand that stagnation is fatal, for a host of reasons established companies often struggle to innovate—purposefully and powerfully.

    Antler’s Business Development and Collaborations Group helps global corporates drive innovation excellence through high value-generating collaborations with Antler’s 1,000+ (and growing) global startup portfolio. In our collaboration with Investa, a leading Australian real estate investment manager and developer, we are connecting them to our global community of founders and the cutting-edge solutions they are building.

    Read more about the powerful outcomes that happen when ambitious startups and industry leaders come together.

    5 min read
    The next wave of innovation: 27 industry trends set to define 2024

    What will innovation look like as we move deeper into 2024? What are the biggest industry trends that will define the coming year?

    We asked our global network of Antler Operators—founders, sector leaders, CxOs, and VPs from companies including Roblox, Airtable, Shopify, Spotify, Affirm, DoorDash, Uber, Hubspot, and more, who offer 1:1 advice to Antler portfolio companies, giving them extra firepower to help fast-track their growth.

    5 min read
    Antler leads $5.1M pre-seed funding for 37 startups across Southeast Asia

    This marks the highest number of pre-seed deals completed in a single round in the region.