How Much Money Should You Raise From Equity Crowdfunding?

If you are about to raise money using equity crowdfunding or if you are about to launch a new business, make sure you read The Lean Startup.  And re-read it until you know it off by heart!

The central theme of The Lean Startup is that entrepreneurs should focus on making a Minimum Viable Product which would enable them to test that product in a live environment with real customers.  Based on the feedback from that testing the entrepreneur can then refine the product and continue iterating until the ideal product has been designed.

This concept can be extended to raising money for your startup, whether via equity crowdfunding or from state organisations, such as EI.  This article captures it very well when we it says: “raise only as much money as your company needs to achieve major proof-points/milestones and practice frugality to keep a low cash burn rate, which impresses investors.”

Success is not defined by how much money you raise.  Instead it is the way in which this money is utilised which determines success.  Potential investors will be more impressed with the way in which capital is efficiently managed and will view it as a more relevant indicator of success.

 

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