Fundraising Modeling Guide

How to use the Fundraising Scenarios tab to model different round structures, understand dilution, and prepare for investor conversations.

Key Concepts

Pre-Money Valuation

What investors say your company is worth *before* their money goes in.

Post-Money Valuation

Post-Money = Pre-Money + Investment Amount

Dilution

New Investor Ownership = Investment ÷ Post-Money Valuation
Founder Dilution = Previous Ownership × (1 - New Investor %)

Example: You own 80%, investor puts in $2M at $8M pre ($10M post). They get 20%. Your ownership becomes 80% × (1 - 20%) = 64%.

Modeling a Round

Step 1: Determine your ARR multiple

Investors typically value SaaS companies as a multiple of ARR:

Multiples vary wildly based on growth rate, retention, and market conditions.

Step 2: Size the round

Rule of thumb: Raise 18-24 months of runway at your projected burn rate.

Round Size = Monthly Burn × 18 to 24

But also consider growth investment — you'll likely increase burn post-fundraise.

Step 3: Model the dilution

In the Fundraising tab, enter:

• Pre-Money Valuation (from Step 1)
• Investment Amount (from Step 2)
• Current ownership (founders + employees)

The formulas calculate post-money, dilution, and resulting ownership.

Use-of-Funds Allocation

Investors want to know how you'll spend their money. Typical allocations:

Scenario Comparison

Always model at least 3 scenarios:

1. Smaller raise, lower valuation — Less dilution in percentage terms, but less runway. Good if you're confident you can hit milestones quickly.

2. Larger raise, higher valuation — More dilution, more runway, more time to execute. Good if the market is uncertain.

3. Bridge / extension — Small amount from existing investors at a slight markup. Buys 6-12 months without a full fundraising process.

Decision Framework

Choose the smaller raise when:

• You're 3-6 months from a major milestone that would increase your valuation
• Current metrics support a higher valuation than investors are offering
• You want to minimize dilution and raise again soon at better terms

Choose the larger raise when:

• Market conditions are favorable (raise when you can, not when you must)
• You need significant investment in product/team before revenues justify valuation
• Competitors are well-funded and speed matters

Option Pool Considerations

Investors typically require a 10-20% option pool *pre-money* (meaning it comes out of founders' share, not investors').

Effective Pre-Money = Stated Pre-Money - New Option Pool Shares

A "$10M pre-money" with a 15% option pool expansion really values the existing shareholders at $8.5M.

How to model in the spreadsheet

In the Fundraising tab, the "Employee Pool Before" and "Employee Pool After" columns show how the option pool changes. If investors require pool expansion, it dilutes founders more than the headline numbers suggest.

Multiple Round Modeling

To see cumulative dilution across rounds:

Founder Ownership After Round N =
  Original × (1 - Dilution_Round1) × (1 - Dilution_Round2) × ... × (1 - Dilution_RoundN)

Typical founder ownership after each round:

• After Seed: 70-80%
• After Series A: 50-60%
• After Series B: 35-45%
• After Series C: 25-35%
• At IPO: 10-20%

These ranges assume no pool expansion pressure and modest dilution per round.

What Investors Look For at Each Stage

Negotiation Levers

Beyond valuation and amount, these terms matter:

The spreadsheet focuses on economics (valuation/dilution), but always review the full term sheet with legal counsel.