Once we know our Raise Amount and anticipated Dilution, the rest of this exercise is just math.

For example, if we are raising $500,000 (Seed Round) and we expect to face 25% Dilution, then the Valuation of our Company is $2,000,000.

Now watch what happens if we simply just decide to raise more money.

If we only increase our Raise Amount to $1,000,000 (vs. $500k) and we still face 25% Dilution, then the value of our company is $4,000,000.

What just happened?

The Valuation of our startup actually increases (or decreases) with our Raise Amount. That’s because investors tend to take the same 25% of our company regardless of how much we raise.

That’s why the general theory is that you tend to raise as much money as you can, while you can, ideally at a higher corresponding Valuation, because you typically only raise a handful of times.