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How much money to raise?

July 3, 2007

Marc Andreessen answers that question in a post titled, "The Pmarca Guide to Startup, part 6: How much funding is too little? Too much?"  He answers those questions in a lengthy piece worthy of a read to better understand Marc and his business philosophy. 

Marc puts startups into two primary funding categories and given his POV they make a lot of sense:

  • Before Product/Market Fit ‘before’
  • After Product/Market Fit ‘after’

He then suggests that startups in the ‘before’ stage should, "ideally raise at least enough money to get to Product/Market Fit".  He goes on to explain that startups in the ‘after’ stage should, "ideally raise at least enough money to fully exploit the opportunity in front of it, and then to get to profitability while still fully exploiting that opportunity."

How much is enough money?  He clarifies that it should include, "a substantial amount of extra money beyond your default plan."  What if you can’t raise that much money?  Marc suggests that it doesn’t matter because he believes that "this is still the correct underlying theory for how much money a startup should raise…" 

 

Written by Alexander Muse · Filed Under Blog 

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