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Founders: your next fundraise could be a make-or-break moment. Don’t let inflated valuations or poor cash flow management sidetrack your success. As down rounds and flat rounds become more common, now is the time to focus on building a sustainable, capital-efficient business that thrives regardless of market trends. In 1H 2024, flat and down rounds hit a decade high at ~30% of all deals largely due to inflated valuations from previous years. Founders who raised at inflated valuations but couldn’t meet expectations during their next fundraise are now raising in flat or down rounds. If you're raising a seed now, research related Series A deals to understand the benchmarks. Use that data to reverse-engineer your seed round and the milestones you’ll need to hit by Series A. Let’s say you’re raising a $3M seed on a $10M post$ valuation for 18 months of runway. You’re currently at $800k ARR and expect to close the year at $1M ARR, projecting 400% growth YoY. In 18 months, you’ll need to raise again unless you hit breakeven. Fundraising can take 3–6 months, meaning you’re likely back in the market in 12 months. What will your fundraising story be in 12 months? If your industry comps are seeing 10x LTM revenue, you’ll want to aim for $3M+ ARR by the time you raise your Series A for a $30M valuation. You should project $9M+ ARR the following year, with a well-defined pipeline that backs it up. For those aiming for unicorn status ($1B valuation), there's a widely followed rule known as 'triple, triple, double, double.' This means after you achieve $1M in ARR, you triple your revenue for two years, then double it the next two. If you're at $1M ARR today, you’ll aim for $3M ARR next year, $9M the year after, and eventually $36M ARR in year five. Not every company will follow this, but it’s a powerful framework for setting aggressive growth targets. Keep in mind, venture capital investors have investors, too. There are return profiles we need to see and believe in before writing a check. I’ll dive into that in another post. Cash flow management is critical because anything can happen between rounds. Customers can churn, prospects can ghost, and entire deals can vanish due to a leadership change at the company. “Growth at all costs” is no longer the standard. Many investors now prefer capital-efficient startups with strong margins and a path to profitability. Once you’re out of cash, you’re out of cash. You do NOT want to raise for 18 months of runway only to find yourself raising again in 6 months because of poor spending discipline. This will shift your focus from growing the business to raising capital, and you’ll lose more equity than necessary and dilute your current investors prematurely. Set weekly, monthly, and quarterly budgets. Regularly compare them to your actual spend to keep your financials in check. Raising capital is about more than just runway. It’s about sustainable growth and setting your company up for long-term success.