How much to raise: the milestone method

Founders are told to raise "eighteen months of runway". It is not bad advice, but it answers the wrong question. Runway is how long the money lasts; what investors fund is what the money reaches. Size the round from the milestone, then check the runway, not the other way round.

The milestone method, in four steps

1. Name the milestone that changes your valuation. For most businesses it is one of: first revenue; a revenue level at which the business is fundable at a much higher price (often around £50–100k MRR for software, profitability for a physical business); a regulatory or product gate; or cash-positive operation. Be specific: "£60k MRR", "four sites open and each cash-positive", "CE mark obtained".
2. Build the forecast to that milestone. Month by month: revenue from customers × price, costs from people, rent and everything else, the investment spend. The cashflow tool does this. The cash low point in that forecast is the minimum you need.
3. Add a buffer for being wrong. Everything takes longer. Add 25–40% to the low point, or three to six months of costs, whichever is larger. Investors know forecasts slip; a buffer in the plan reads as maturity, not padding.
4. Check the dilution. Raise ÷ post-money valuation = what you give away. If the number from step 3 means giving away more than about 25% in this round, either the milestone is too ambitious for this stage or the valuation is wrong. Split the milestone into a nearer one.

A worked example

Kestrel is at £18k MRR. The milestone that changes everything is £60k MRR — at that level it can raise a Series A at a multiple of today's valuation, or stop raising. The model says two salespeople and a developer get there in fourteen months on the current conversion rate, with a cash low point of £410k in month nine. Add a 40% buffer: £575k. Round to £600k. At a £3m pre-money that is 16.7% — comfortable. If Kestrel had raised "eighteen months of runway" at current burn it would have raised £350k, run out in month eleven, and been raising again at the worst possible moment.

The two expensive mistakes

Raising too little. It feels prudent — less dilution — and it is the most common way founders lose their companies. You run out before the milestone, raise again from weakness, and give away more in the bridge than you saved. If in doubt, raise to the milestone plus buffer.

Raising too much. Rarer, but real: a round so large the valuation has to be stretched to keep dilution sane, and the next round cannot clear it. The test is whether the valuation is explained by the traction. If you need a story to justify it, raise less.

How much is fundable on Find

Founder raises on Find run from £100,000 to £2,000,000. Below £100k, friends, family and a bank are usually faster. Above £2m, you are into institutional territory with a different process. Within the range, the sweet spot for first rounds from certified individual investors is £150k–£750k in tickets of £10k–£50k — which means ten to twenty investors, which is why the listing has to work for a lot of people at once.

Questions founders ask

"Can I raise in tranches?"

Yes — first close, second close — and it is often sensible: close the committed money, keep the listing open, close the rest. Set the terms once so every investor is on the same price. Tell investors the plan; nobody likes discovering there is a second close with better terms.

"What if I only get half?"

Decide before you start what you do with half. Often the answer is a smaller, nearer milestone and a bridge later. Sometimes it is "do not close". Knowing which in advance stops you taking bad money in a panic.

"Should I raise for eighteen months' runway as well as the milestone?"

If the milestone lands before eighteen months, the buffer covers the gap. If it lands after, you are raising for more than one round's worth of work — split it.

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