Why Your Ask Number Shouldn't Be a Guess

Lottery researchers have found the same thing for decades: most players don't calculate their numbers, they remember them. Birthdays. Anniversaries. The one that came to them the night before, half-asleep, that felt right for reasons they couldn't explain.

Nobody runs the odds first. They just have a number, and the number feels true, so they play it.

Statisticians will tell you it doesn't matter which numbers you pick — the math is the math either way. But the ritual matters to the person doing it. The number has to feel earned, even when it isn't.

I bring this up because founders do the exact same thing with their raise.

Someone asks "how much are you raising?" and out comes a number — $500K, $2M, whatever felt right the night before the pitch. Round, confident, memorable. Nobody ran it against what it actually costs.

Here's the part that doesn't feel intuitive until you sit with it: investment money is expensive money. Take a $50,000 loan at 7%, pay it off in five years, you've handed back about $10,000 extra. Sell the company for a million later, you keep $990,000.

Take $50,000 from an investor instead for 10% of the business. Sell for a million, and that 10% is now worth $100,000. You keep $900,000.

Same number on the slide. Ninety thousand dollars of difference in your pocket, depending on which kind of money you picked.

A lottery number chosen the night before costs you a dollar and a bit of hope. A fundraising number chosen the night before gets written into a cap table, with preference rights and terms that outlive the feeling you had when you picked it.

Investors don't have to give you anything. When they do, the number you asked for keeps compounding — long after you've forgotten why it felt right.

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More on this in The Pitch Deck Book.

Composite characters, invented companies. The mistakes are real; the people aren't.