Deciding when to raise money and how much to raise are among the most crucial decisions a startup CEO makes.
The “textbook answer” for the questions above is to raise enough capital for the company to achieve an accretive milestone. After hitting that milestone the company can go out again and raise more money at a significant step up (2x increase in value is a good number to start from). An accretive milestone is something that significantly reduces a risk which the company faces. This can be proving the technology works for technology-intensive startups, generating user traction for internet companies, finding a scalable GTM model, or even getting your first paying customer.
One of the most important milestones is starting to generate revenue. Many companies don’t generate revenue for some time since launch. This happens for many reasons such as having to build a complex technological product before being able to sell it, or having to reach enough user traction for the product/service to be worth something (e.g., Pinterest, Facebook), or even wanting to test several business models before deciding on the correct one.