A company can have a compelling product, growing revenue and a large market opportunity, and still struggle to attract capital if management can’t demonstrate capital efficiency.

When investors look at a capital raise, they’re not only asking: “How much money does this company need?” They’re asking: “What will this capital change?”

Five questions every founder should be able to answer:

1. What specifically will the capital fund?
Not “growth.” Sales hires? Inventory? Technology? Acquisitions? Geographic expansion? Working capital? Be specific.

2. What happens if you raise less than planned?
A strong capital plan has priorities, not just a target number.

3. What measurable milestones will the capital produce?
Investors need to see the connection between dollars invested and business outcomes.

4. How long will the capital last?
Runway matters, but so does what the company expects to accomplish before it runs out.

5. What does the next round look like?
The best capital raises don’t only solve today’s cash need. They create the conditions for the company’s next stage of growth (and potentially a higher valuation).

This is why “We need $5 million to grow” isn’t an investment thesis. “We’re raising $5 million to accomplish X, Y and Z, which we expect to produce A, B and C” is much closer.

Capital should have a job – and investors want to know what that job is before they fund the company.

If you were raising capital today, could you explain exactly what every dollar would accomplish?