Over the past few decades, we've seen a remarkable shift in the startup world. What used to be considered a substantial fundraise has been dwarfed by today's standards. The rise of unicorns and even decacorns has become commonplace. Valuations are skyrocketing to previously unimaginable heights. I'm Chris Lynch, Executive Chairman and CEO of AtScale, and a veteran venture capitalist. Throughout my career, I've had a front-row seat to these dramatic changes in startup funding.Each market cycle seems to push the boundaries further. From the dot-com boom to the tech surge in the 2010s to now, we've witnessed an enormous escalation in the amount of capital being deployed. Venture capital firms are pouring hundreds of millions into startups, often before the companies have even launched a product. But this flood of capital has downsides — it can create some serious challenges for founders. Let's explore the pitfalls of overcapitalization and why sometimes less really can be more. For startup fundraising, bigger isn’t always betterWhen it comes to fundraising, there's a strong case for what I call the "right-sized fundraise." It's tempting to raise as much capital as possible, but that approach can lead to several problems. First, the amount of money you have often dictates your spending habits. If you raise a seed round of a $100 million, you’ll feel like money is no object, and that will affect your spending decisions. Abundance can lead to a "Sure, why not?" attitude that may not serve your business well in the short term or the long run. Excessive early funding can also result in "strategic lockdown." When you've raised substantial capital around a specific plan, there's a natural reluctance to revisit core assumptions or make significant changes. This inflexibility can be detrimental to your ability to pivot and adapt. There's also the matter of investor pressure. Larger fundraises come with heightened expectations for rapid growth and positive results. This pressure can limit your options and force you into decisions that might not be best for the long-term health of your business. Lastly, early over-funding can create a compounding problem with future fundraises. Each subsequent round may need to be larger to maintain the perception of growth and success, and that can lead to unsustainable cycles. My advice is to raise capital judiciously. Focus on what you need to achieve specific milestones, rather than getting every possible cent from investors. This approach can help you maintain flexibility, focus and a more sustainable growth trajectory. How to resist the siren call of massive fundraising roundsEven the most disciplined and principled founders can fall into the trap of raising more money than they truly need. I’m the first to admit that it’s tempting — especially when investors are eager to write big checks. But my advice is to approach fundraising with a conservative mindset, while still allowing for some margin of error.  The key is to plan carefully for how you'll use the capital before you have it in your hands. Create detailed financial projections and milestone-based budgets, then plan to raise enough to meet those targets plus a little bit of buffer. When budgeting, remember that things often take longer and cost more than anticipated in the startup world. Raising strategic amounts of capital positions you to navigate unexpected challenges without the pressure of excessive capital weighing on your decision-making. Again, let me stress that you need to be wary of the lure of a massive payout. It's easy to get caught up in the excitement of a large fundraise and the potential personal wealth it might bring. But don’t let this be the driving factor in your fundraising strategy. The focus should always be on building a sustainable, valuable business. Raise only what you need, so you can maintain control over your company and make the decisions you want as a founder.