Do not raise less than one million.
and why
Signalling
One of the most valuable things you can do as a founder is to:
i) get signals about whether your startup is a good idea, and
ii) listen and act on those signals.
Entrepreneurs are great at trying, listening, moving-on and locking-in - based on signals.
The best signal that your startup is promising is revenue. Another strong signal is a competent cofounder joining. A third signal is investors wanting to invest a meaningful amount in your startup.
If you are considering fundraising, you have accepted to compete internationally. This is because the returns for investors in startups come from a small number of large outcomes. These large outcomes are in the largest markets. Yes, maybe you are starting with a beach-head market for your product, but you should consider yourself in the global market for fundraising.
In 2025, the better startups - with first time founders - are raising over $1 million in their first round of funding, probably more (low single digit millions). If you are raising less than that, this is going to be a negative signal in two ways:
It is a signal to you that your startup – as conceived – is not among the better startups.
It is a signal to future prospective investors that your startup was not among the strongest, i.e. the effect will endure.
Other Practical Problems
A. Every round of fundraising often dilutes founders by 20-25%. You might raise a round of $500k to start, and then a round of $1.5M later. Stronger founders start by raising $1.5M and skip a whole round of dilution. This is bad for you the founder. Future investors know this is bad for the amount of equity owned by founders.
B. Less than $1M is not a lot of money when you are spending on hiring. Soon, you’ll need to go back for more.
C. Taking money from investors is a responsibility, no matter the form of investment, e.g. SAFE, convertible note, equity round. Regardless of how much money you raise, this responsibility switch flips from 0 to 1. If you are going to flip the switch, you want the amount raised to be meaningful.
What counts as one million?
It counts as clearing the one million threshold if it comes from financial investors, namely - angels or VCs. Taken as a whole, financial investors are well incentivised to give you a meaningful signal.
With corporate and public monies, be cautious counting investments as part of the one million threshold. Why?
Corporate investments from a strategic partner can be good, but the incentives are complicated. They may be competing in similar markets and may be valuing information as opposed to financial outcome.
As with VC firms, public entities that make investments can be well run or poorly run - there are exceptional examples in each category. The difference is that VC firms and angels have stronger financial pressures to be good at what they do. Angels have direct skin in the game. VC partners need to perform well to keep raising new funds.
What should you do if you cannot raise one million?
Have you travelled abroad and spent time talking to founders there? …especially to the US - to get an idea of how much they are raising and how they are getting to know investors. If not, this is a good option. I see a) many founders moving to the US, but also b) founders spending time in the US, raising money there, but basing themselves abroad. Both are options to consider.
Have you considered NOT raising money? I have raised a first round of one million before. I have also NOT raised any money - as I am doing with Trelis.com . You can learn a lot from cutting back on spending, and being profitable. You don’t have to do this for the rest of your life. It can be a short- or medium-term experience before a new startup.
Change something about your startup. Before you raise money.
If you’re an early stage entrepreneur, consider reading more on this website, and potentially applying for a micro-grant, that’s what this website is about.