Before you run these exercises
Chapter 7 covers three things most founders get wrong about money: how to size a raise, how to think about dilution, and why financial models matter even though the numbers will be wrong. There's a specific story in this chapter about a founder who was asking for the wrong amount — and what happened when she was pushed to think bigger. The lesson is counterintuitive and worth reading before you do the exercises.
The chapter also has a sharp section on the psychology of caution — why moving slowly feels like discipline but is actually a form of risk — and a practical framework for building a stage-based financial model without needing a finance background.
The chapter explains something most founders never figure out: there's a specific way VCs think about financial projections that is fundamentally different from how founders think about them — and that gap is where founders consistently handcuff themselves before they ever walk in the room. The full logic of why is in the book and worth reading before you do this exercise. What you'll find is that the number founders ask for, and the way they justify it, often signals exactly the wrong things.
The short version is this: your raise number should be built around milestones, not months — and specifically around the milestones that hit the sweet spot for the size of round you're targeting. VCs at different stages have check sizes that work for them, and a raise that's too small signals you don't understand the game you're playing. But you need current data on what those sweet spots actually are, not assumptions.
Claude can search the web for current round size data — no need to switch tools.
The chapter has a specific take on financial models that you won't hear from most people telling you to build one: the numbers will be 100% wrong, and building the model is still one of the most valuable things you can do. The reason why — and the way investors actually use your model against you or with you in a meeting — is something the chapter explains in a way that changes how you'll think about the whole exercise. This is a section worth reading closely before you start building.
What the chapter makes clear is that a financial model isn't a prediction. It's a test of your judgment — and investors are using it to probe the quality of your thinking, not the accuracy of your forecast. There's a specific exchange in the chapter between a founder and an investor that illustrates exactly what a great model answer sounds like versus a bad one. Read it. Then build yours.
The exercise below has two parts: building the model with Claude, and then identifying the specific people who can gut-check your assumptions before an investor does. That second part is where most founders leave value on the table.
Part 1 — Build the model
Part 2 — Find your gut-checkers
A model built in isolation is just a spreadsheet. The assumptions that will get you in trouble in a meeting are the ones that sound reasonable to you but that someone with real experience in your function would immediately flag. Before an investor sees it, you want someone who has lived inside each part of your model to tell you where you're wrong.
The chapter makes a pointed observation: if you're building B2B SaaS in Oklahoma and don't know anyone who has raised venture, you have no idea whether what you think are milestones would actually read that way to an investor. The milestones that matter are category-specific — and you need live data to know what bar you're actually being measured against.
Claude can search the web for current milestone data in your category.
- Use this Claude prompt to find the real milestone bar for your category:
- Take the results and add a row to your investor tracker (from Ch 2) showing the milestone bar for your category — so you can see, for every investor you approach, whether you're above or below their likely threshold.
- If you're below the bar: feed the results to Claude and ask: "Given this milestone bar, what's the fastest path from where I am to the bottom of the fundable range — and what specifically should I do in the next 60 days?"
Chapter 7 is really about one thing: are you making decisions like a strategist or an accountant? The number you're raising, the milestones you're targeting, the pace you're moving at, the model you're building — all of it should be oriented around the next obvious yes, not the next obvious safe move.
Before you move on: know what your strategic raise number is and why, understand your dilution math correctly (multiplicative, not additive), and identify at least one place you've been calling caution what is actually hesitation. The model doesn't need to be right. It needs to show that you know how the business works.