Dear SaaStr: Should I Tell VCs How Much I Want Them to Invest?

Dear SaaStr: Should I Tell VCs How Much I Want Them to Invest?

Yes.  At least, 95% of the time.

  • It helps a VC quickly get context, and figure out if the deal fits — or not
  • It tells a VC how much you need to get to the next level (it simplifies your entire business plan into one number), and
  • It tells me if you are in their sandbox or not.

Telling me you need $750k tells me one thing. $2m another. $5m yet more. $10m tells me you are really ready to scale. Which is too late a stage for me, but not many others.

Especially as a “late seed” investor, I want to quickly find out if you’ve passed my sweet spot or not.

If you won’t tell me how much you want to raise, or don’t make it clear, at a minimum, I just have to ask.

On a related point, especially for a Late Seed or “Early A” — and especially these days — be careful you don’t ask for too much. If for no other reason, then certain investors will bow out. The largest check I’ll write is about $4m, for example. So if you are raising $1m, fine. $3m, fine. Even $6m is OK, because probably others (e.g., earlier investors) will pick up the $2m gap. But $10m? That’s too big a check for me.

So if you need $10m or whatever number, ask for it. But make sure you do your homework on each investor.

Don’t ask an investor for more money than they will invest, if you’d take less. I.e., don’t ask for $10m+ from an investor that will only do a round up to $6m-$8m. If you do, you are just wasting the meeting / opportunity.

Now, some folks will tell you to be cagey here.  That the amount raised sort of defines your valuation, which it can.  That you might be able to get even more, if you are vague here.  Sometimes.  If you are hottest thing since Datadog, yes, then maybe be vague.  Maybe.  For the rest of us, be direct.  Selling stock is sales.  And you want to remove objections from sales.  And make it as easy as possible … to close the sale.

A related post here:

And a great deep-dive AMA from yesterday on getting funded in 2022 here, where we talk about this question and so much more:

(note: an updated SaaStr Classic answer)

Published on August 5, 2022

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