The Fundraising Ask: How to Decide How Much to Raise and Frame the Use of Funds

By Yanni Papoutski / Published 19 April 2026 / 10 min read

The Ask slide is not just about requesting money. It is about demonstrating that you have thought through your business model, your growth plan, and how you will use capital to reach a specific milestone that unlocks the next round.

How Much Should You Raise?

The principle is simple: raise enough to reach a specific milestone on 18-24 months of runway.

Do not raise based on:

Instead, raise based on: the specific milestone you need to hit to unlock the next round of funding.

The Formula

Step 1: Calculate your monthly burn rate.

Burn rate = Total monthly expenses (salaries, cloud infrastructure, marketing, office, etc.)

Example: Your team of four people has a payroll of 50,000 pounds per month. Infrastructure and tools cost 5,000 pounds per month. Marketing and sales are 10,000 pounds per month. Office and admin are 5,000 pounds per month. Total burn: 70,000 pounds per month.

Step 2: Identify the milestone that will unlock Series B.

For a B2B SaaS company at Series A, typical Series B milestones are:

Let us say you are at 50,000 pounds MRR (600,000 pounds ARR) and you need to reach 500,000 pounds ARR. You have some traction, but you need to hit a clearer milestone.

Wait, that does not make sense. You are already above 500,000 pounds ARR. Let me redo this example.

Let us say you are at 10,000 pounds MRR (120,000 pounds ARR) and you need to reach 500,000 pounds ARR. That is a 4x growth in a year. At your current MRR, that is 40,000 pounds of incremental ARR per month. Doable with capital investment.

Step 3: Calculate how many months of runway you need to hit that milestone.

At 70,000 pounds burn per month and 40,000 pounds of incremental ARR per month, you will be cash-flow positive in roughly 18 months (when revenue covers burn). But you want to be comfortable, so aim for 24 months of runway to the milestone.

Step 4: Calculate the raise amount.

Runway needed: 24 months

Burn rate: 70,000 pounds per month

24 months × 70,000 = 1,680,000 pounds

But wait, you have revenue. Let us assume you are at 20,000 pounds per month in revenue.

Net burn: 70,000 - 20,000 = 50,000 pounds per month

24 months × 50,000 = 1,200,000 pounds

You should raise approximately 1.2 million pounds.

Add a Buffer

You will inevitably encounter things you did not budget for (hiring takes longer, a key customer churns, market conditions shift). Add 10-20 per cent buffer to your calculation.

1.2 million pounds × 1.15 = 1.38 million pounds

Round to 1.5 million pounds for simplicity.

Series-Specific Guidance

Seed round: Typically 500k-2 million pounds. Enough runway to get to product-market fit signals (paying customers, product traction).

Series A round: Typically 3-10 million pounds. Enough runway to reach Series B milestones (500k+ ARR, unit economics clarity, market traction).

Series B round: Typically 20-50 million pounds. Enough runway to reach Series C milestones (5+ million ARR, clear market leadership, path to profitability).

These are ranges. Your specific round will depend on your burn rate and your milestones.

The Milestone That Unlocks the Next Round

The milestone is critical. It is what justifies the amount you are raising.

A strong milestone is:

Weak milestone: "Grow our customer base."

Strong milestone: "Reach 500,000 pounds ARR with 100+ paying customers and 115 per cent NRR. This will position us for a 25 million pound Series B in 18 months."

In the strong version, you have told the investor exactly what you will achieve and what comes next. You have a clear plan.

Use of Funds Breakdown

Show exactly where the money will go. Not percentages. Specific amounts and specific purposes.

Typical Series A Use of Funds Breakdown

For a five million pound Series A raise at a typical B2B SaaS company:

Engineering and Product: 45 per cent (2.25 million pounds)

Sales and Marketing: 35 per cent (1.75 million pounds)

Operations and G&A: 20 per cent (1 million pounds)

Why Be Specific

Being specific about use of funds signals that you have thought through your hiring plan, your growth strategy, and your budget. It gives investors confidence that you know how to deploy capital.

Vague use of funds ("growth," "product development," "market expansion") signals that you have not thought through how you will spend the money. Investors do not like uncertainty.

Equity Dilution and Your Ownership

When you raise capital, you give up equity. Understanding dilution is important for negotiating a fair deal.

How Much Equity to Give Up

There is no single right answer, but here are general guidelines:

Seed round: Typically 15-25 per cent dilution. A venture capitalist raising 1 million pounds might take 20 per cent of the company.

Series A round: Typically 20-30 per cent dilution. A venture capitalist raising 5 million pounds might take 25 per cent of the company at a 20 million pound post-money valuation.

Series B round: Typically 20-30 per cent dilution. Similar to Series A.

By Series C: Most founders have diluted to 40-60 per cent ownership if they have raised multiple rounds.

The Formula

Post-money valuation = Pre-money valuation + Round size

Investor ownership = Round size / Post-money valuation

Example:

You are raising 5 million pounds. The VC values your company at 15 million pounds pre-money.

Post-money valuation = 15 + 5 = 20 million pounds

Investor ownership = 5 / 20 = 25 per cent

Your ownership: 75 per cent (before this round) → 75 per cent × 75 per cent = 56 per cent (after this round, accounting for previous dilution)

Wait, that math does not quite work for someone who has not raised before. Let me redo it.

If you are a founder raising your first round with 100 per cent ownership:

Pre-money valuation: 15 million pounds

Round size: 5 million pounds

Post-money valuation: 20 million pounds

Investor gets: 5 / 20 = 25 per cent

You keep: 75 per cent

What Is a Fair Dilution

Anywhere from 15-30 per cent dilution at each round is market standard. Below 15 per cent and you are raising at a high valuation (which is great). Above 30 per cent and you are raising at a low valuation (which is worth questioning).

The key is that the valuation should be backed up by some anchor: comparable companies, revenue multiples, or investor conviction.

Valuation Anchoring and Negotiation

How do you know if a valuation is fair?

Revenue Multiples

For SaaS companies, typical valuations are:

These are benchmarks, not rules. A very high-growth company (150 per cent YoY growth) might trade at 15-20x revenue. A slow-growth company (20 per cent YoY growth) might trade at 3-5x revenue.

Growth Multiples

A useful heuristic is the "Rule of 40": Growth rate + Gross Margin should equal 40 or higher.

A company with 80 per cent growth and 60 per cent gross margin (80 + 60 = 140) is incredibly valuable.

A company with 30 per cent growth and 60 per cent gross margin (30 + 60 = 90) is valuable.

A company with 10 per cent growth and 60 per cent gross margin (10 + 60 = 70) is moderately valuable.

Valuation multiples increase with the Rule of 40 score.

What "Open to Discussion" Costs You

Some founders put "open to discussion" next to the fundraising amount. This signals uncertainty. It tells investors that you have not thought through how much you need.

This costs you in two ways:

First, if you say "open to discussion," investors will offer you less capital than you need. They will say "we can do 1.5 million instead of 2 million." Without a specific number, you have no anchor to negotiate against.

Second, if you say "open to discussion" on valuation, investors will value you lower. They think "if the founder is not sure what they are worth, I will offer a lower number."

Come with a number. You can be flexible in the conversation. But have a starting point. This is more powerful than you might think.

The Ask Slide Structure

A strong Ask slide looks like this:

Headline: "Raising 5 million pounds Series A to reach 500k ARR and clear Series B milestone."

Body:

Visual: A simple pie chart or bar chart showing use of funds allocation. Keep it clean and readable.

Example

Headline: "Raising 5 million pounds to reach 500k ARR, establish market leadership, and unlock Series B in 18 months."

Use of funds:

Milestone by end of Year 2:

Series B Trigger: When we hit 500k ARR with strong unit economics, we will be ready to raise a 25 million pound Series B to scale to enterprise and geographic expansion.

Common Mistakes on the Ask Slide

Mistake 1: Asking for Too Little

If you ask for too little capital, you will run out of runway before hitting your milestone. Then you will need to do a down round (raise at a lower valuation) or shut down.

Calculate carefully and ask for what you actually need.

Mistake 2: Asking for Too Much

If you ask for significantly more than you need, investors question whether you can deploy capital efficiently. They think "if they raise 10 million and only need 5, they will waste the extra 5 million."

Ask for what you need, plus a small buffer (10-15 per cent for contingency).

Mistake 3: Vague Use of Funds

"We will use this capital to grow the company" is not specific enough.

"We will hire 6 engineers, 3 account executives, 1 CFO, and invest 500k in paid marketing" is specific enough.

Mistake 4: Milestone That Is Not Fundable

If your Series B milestone is "be acquired for 500 million pounds," that is not credible. No one raises Series A to get acquired; they raise to build a bigger company.

A fundable Series B milestone is: "500k ARR, clear unit economics, market leadership." These are metrics that Series B investors care about.

Mistake 5: No Clarity on Equity

If you do not know how much equity you are giving up, you will negotiate poorly.

Before you pitch, calculate: "We are raising 5 million. At a 20 million post-money valuation, that is 25 per cent dilution. That feels right."

The Ask Is an Invitation

The Ask slide is not a demand. It is an invitation to the investor to be part of your journey.

The best Ask slides end with something like: "We are raising 5 million pounds to build the category leader in payroll software for SMEs. If you want to be part of this, let us have a conversation."

This signals confidence and clarity. You have thought through what you need, why you need it, and what you will do with it. You are inviting investors to join you on a specific path.

Related Guides