The right mindset !!
“How much should we raise?” is the WRONG question.
The right question is:
What milestones do we need to hit before the next round - and how much will that actually cost?
Let’s break down the real math behind fundraising:
Step 1: Define Milestone-Based Fundraising
Not “18 months runway.”
YES: “We need to hit ₹1Cr ARR, 30% MoM growth, and hire 2 sales leaders to be Series A ready.”
Step 2: Work Backwards from Milestones
Let’s say your goal is:
➡️ ₹1Cr ARR in 18 months
You’re at:
➡️ ₹10L ARR today
You need 10x growth. Time to map CAC, team, burn.
Step 3: Model Core Metrics
1. CAC (Customer Acquisition Cost)
Formula: CAC = Total Sales + Marketing Spend / New Customers Acquired
Say:
₹6L/month on marketing
₹4L/month on sales team
100 new customers/month
➡️ CAC = ₹10L / 100 = ₹10,000
2. LTV (Lifetime Value)
Formula: LTV = ARPU × Gross Margin × Customer Lifespan
Assume:
ARPU = ₹2,000/mo
Gross Margin = 80%
Avg. lifespan = 12 months
➡️ LTV = ₹2,000 × 0.8 × 12 = ₹19,200
LTV:CAC = 1.92:1 → Too low
You need to hit at least 3:1 to scale safely.
Step 4: Estimate Burn
Assume monthly spend:
Team: ₹12L
Infra: ₹3L
Marketing/Sales: ₹10L
➡️ Total burn = ₹25L/month
➡️ For 18 months: ₹4.5Cr
Add buffer (20%): ₹90L
➡️ Total raise needed: ₹5.4Cr
Step 5: Align Round Size with Valuation
Don’t raise ₹5Cr at a ₹10Cr valuation (50% dilution = founder death).
Target dilution: 15–25%
So for ₹5.4Cr, pre-money should be ~₹20Cr
Post-money = ₹25.4Cr → 21% dilution = healthy
👊 Fundraising isn’t a guessing game.
It’s capital allocation driven by clear milestones, clean math, and ruthless focus.
Don’t raise to feel safe. Raise to unlock velocity.
Looking to fundraise send you pitch to ifundindia@gmail.com
#VentureCapital #Startups #Entrepreneurship #Economy #LeanStartups
