How Much Funding To Raise In Each Round

If you ask investors how much funding to raise, you might hear some of these common types of answers:

Y Combinator’s Paul Graham offers this simple formula for determining your funding: multiply the number of people you want to hire times $15,000 times 18 (months). Version One Ventures founder Boris Wertz says you should aim for 15-25 percent dilution per round.Investor Chris Dixon thinks startups raising Series A funding should add a 50% “fudge factor” to account for unexpected obstacles. (Startup advisor Neil Kane agrees, saying: you need more money than you think.)

But all investors have their biases, of course – Graham errs on the side of less money while Peter Thiel advises startups to raise as much as possible, according to a founder who got advice from them both. Another thing you might want to know is how much your startup peers are raising – and that’s one piece of information you’ll find in Mattermark’s 2014 Startup Traction Report. Examining data for the 2014 fiscal year (October 2013-September 2014), here’s what they discovered among venture-funded startups:

Seed round: Average $2 million, median $1 millionSeries A: Average $7 million, median $5 million Series B: Average $15 million, median $11 million Series C: Average $26 million, median $20 million Series D: Average $44 million, median $25 million Late-stage: Average $55 million, median $35 million

(The median, as you’ll remember from math class, refers to the middle number in a sequence of values. The averages are higher than the medians thanks to some big outliers, like Uber’s $1.2 billion in June 2014 and Cloudera’s $900 million in March 2014.) Released last December, the Mattermark 2014 Startup Traction Report includes a wealth of data on the fastest-growing startups, regions, and industries (get it for $99). They used data from public sources like Crunchbase, AngelList, NASDAQ, the SEC, and the White House Office of Management & Budget, as well as private relationships they have with investors and entrepreneurs. Image credit: Flickr / TaxCredits.net / SS BY-SA 2.0