How to practically run a fundraising round?

How to frame how much you're raising?

There is no one right way to run a fundraise, so I'm sharing 2 frameworks that people can follow:

1. The Valuation Selected Method - You could go out and say that you're raising £1M of funding at £4M. Here, if you don't raise £1M, investors think you don't have demand and will drop out. You could always raise £1.2M and the round will be 'over-subscribed', however, you need to make sure you don't say £1M and left high and dry on £500K. To mitigate this, you could say you're raising £750k - £1M, but to caveat, I've heard some investors dislike this as it indicates uncertainty on how much money you need. The price should solve for you likely diluting yourself by 15-20% in the round (it can be 10% but I think this is less popular). The valuation will likely have to be commensurate with traction. Generally, as of Feb 2025, you see Pre-Seeds at £3-5M pre-money.
2. The Range Method - An alternative method which probably works better at later stages could be saying that you will raise between £2M and £10M and let the investors choose the valuation.
3. The Cleo Method - A final method, used by Cleo and shared here, outlines building two plans for two alternative fundraising worlds. A little more complicated but does prime/nudge VCs that they could upscale their interest and give you a lot more money. Likely works better with VCs than it does angel investors.

Either way, emphasising in conversations with VCs that you would like to keep vanilla terms and a vanilla Cap Table is worthwhile mentioning upfront.

How to calculate Pre-Money & Post-Money Valuations?

When raising funds, understanding pre-money and post-money valuations is key. These figures determine your company’s worth before and after investment, and how much equity you'll give up.

• Pre-money valuation is your company’s value before funding.
• Post-money valuation is your company’s value after investment (pre-money valuation + investment amount).

The higher the pre-money valuation, the less equity you’ll need to give up for the same investment.

Why It Matters

These valuations impact how much ownership investors receive in exchange for their investment, and help you manage dilution. The higher the pre-money valuation, the better it is for you, as it results in less dilution for any given amount of funding.

Use Our Calculator

Want to see how it works for your business? Use our Fundraising Calculator to calculate how many shares you need to issue and see how different funding amounts impact your equity.