A standard question which comes up in the mind of an entrepreneur when looking for funding is how much investment can his/her startup potentially raise. The amount of investment which can be raised by a startup is totally dependent on 2 factors.
Traction – This is what the startup has already achieved. This can be actual sales, users acquired, traffic acquired etc. The higher the traction, the more confidence an investor gets in a startup model and hence higher is the amount the startup can potentially raise. (Also if you do not need to raise a high amount, lower equity can be offered)
Business Potential – This refers to the vision of the entrepreneur and potential of the scale of the business. The bigger the potential, the more money an investor will be willing to put in.
To conclude, the amount of investment a startup can raise is directly dependent on the traction the startup has been able to achieve till that point and the potential of the business going forward.
Note: This being said, a startup must only raise the amount which is actually required. Taking more money leads to inefficiencies and also a higher offload of equity to the investor.