Raising capital is one of the things any startup founder will have to do. Paul Graham explained that the major difference between startups and other businesses is how fast startups can/must grow. 

For startups to be able to hit this kind of exponential growth, they will need to raise funding. Funding helps startups to grow at whatever speed they want to. If a startup doesn't raise funding, its growth options will be limited to bootstrapping. Bootstrapping is when a founder reinvests their profits into the business over a long period. The problem with bootstrapping is that it limits a startup to growing as fast as its profits allow. This is slow, but steady and consistent growth. 

However, external funding helps the startup to spend money that they don't necessarily make. A startup can have $100,000 a year in revenue, but spend $300,000 because they raised $1M for the next three years. The purpose of this is growth first, and profits later. 

But when raising, how can a founder determine how much to raise exactly? Raising too little funding will cripple the startup while raising too much would dilute the startup. So the funding has to be exact. 

To do this, the startup founder will have to sit down with his team. The founder will discuss what their next milestone or milestones are. They will then determine when they can achieve this milestone e.g. in the next 18-24 months. This is where financial projections come in. 

The founder, alongside the finance team, will break down how much they project to spend every month throughout when they will hit those milestones. The projections should incorporate every expense, even those that will have to be added, so this has to be thorough. 

After getting the monthly expense projections, the founder will multiply it by the number of months it will take to hit the milestone. For example, if I determine that my monthly expenses will be $10,000 and I will need 18 months to hit my milestone, then that means I should raise $180,000. 

And after raising this funding, the founder should maintain the financial discipline needed to hit the milestone. Remember, the money you have raised is for your company, not for personal use. Investors have backed you to make returns, and if you use the money for personal fetishes, then it will be very difficult to make those returns.