Why This Entrepreneur Raised Millions More Than He Originally Planned Despite being a well-known investor in Canada and one of the stars of the French-Canadian version of 'Shark Tank,' this entrepreneur got his funding needs wrong twice.

Editor's Note: In the new podcast Masters of Scale, LinkedIn co-founder and Greylock partner Reid Hoffman explores his philosophy on how to scale a business -- and at Entrepreneur.com, entrepreneurs are responding with their own ideas and experiences in our hub. This week, we're discussing Hoffman's theory: you need to raise more money than you think you need -- and potentially a lot more.

Can't figure out how much money to raise for your company? Don't feel bad: Even a guy like Martin-Luc Archambault has had trouble settling on a number. He's a well-known investor in Canada, as one of the stars of Dans l'oeil du Dragon, the French-Canadian version of Shark Tank. He's also the founder and CEO of AmpMe, an app that syncs devices together so that they play the same music at the same time -- effectively turning a bunch of phones and tablets into a giant speaker system. And yet, despite his experience launching or working with multiple startups, he got his funding needs wrong twice.

Related: LinkedIn's Reid Hoffman to Entrepreneurs: Raise More Money Than You Need

Today, AmpMe has 4 million downloads, more than 20 employees, and has raised $10 million. We spoke to Archambault about how he solved his problems, raised the money to help his company grow, and whether he agrees with Reid Hoffman's philosophy that entrepreneurs should raise more than they think they need.

When you first launched AmpMe in 2015, you did it without investors. What happened?

I initially funded it all myself. I put in the first $1.5 million, and I thought it was going to cost me much less. Like, I thought it would cost me $200,000, or $300,000. But right off the bat, it cost me more, because it was a complex technology. Synchronization was way, way harder than we initially had planned.

So you decided to raise $5 million. But you underestimated that, too.

Yes, you're right. When we raised the Series A, the initial term sheet was for $5 million, and we saw a lot of demand from investors. So I said, hey, maybe we should leave it open up to $8 million and see how it goes. Because it will give me more runway, and it'll put a little less stress on the company. Yes, I'll be diluted a little more, but the dilution was something I could live with, in exchange for buying more runway and just peace of mind of not having to raise again in 12 months.

And is that what happened? You raised $8 million in that round?

Exactly.

So you did exactly what Reid Hoffman says to do: You raised more money than you originally thought you needed. But did you feel like you actually knew what you were going to do with that extra $3 million?

That's kind of a trick question, because you're supposed to know exactly what your plan is when you raise the money, and show it on paper and everything. But the reality is, you don't.

I'll give you an example that we hadn't thought about in our budget, where actually it's proving useful that we raised more. When I raised money, I didn't think I'd have to add music sources every couple months. [To play music with AmpMe, users can use their local music library or multiple integrated streaming services.] I thought that after adding four or five different sources, like Spotify and SoundCloud, I'd be good to go. But I did not expect that we would have traction in markets like India, like France, like Brazil. India is one of our top three countries right now, for example, and they don't use Spotify; the most popular service there is Gaana, which we don't support yet.

To keep up, we needed to build a five-person team to integrate new music sources every month. That team was not in my budget. So it's a good thing that I raised the money, otherwise it would have shortened my runway had I only taken $5 million.

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When you talk to entrepreneurs about raising money, do you suggest this to them -- that they should raise more than they think they need?

It depends on the kind of business. If it's a business that does not forecast any revenue for the next couple of years, I think you should definitely take more, because it's going to be harder than you thought. If it's a business that's already generating revenue, it's a question of minimizing dilution as well. It's always a balance, because shareholders or the entrepreneurs are going to want to raise as much money without the dilution, and at one point they probably had a number in mind where they don't want to go under X percent of equity in the company.

But what I tell them is, first of all, it's fucking hard to raise money. If you need the money a little bit later and your company is not doing well, you'll have a hard time raising it. If you can raise it now, I think you should, even if you get diluted by an extra 2, 3 percent, because later on, you'll be able to regain all of that with a better valuation.

Let's say an entrepreneur comes to you asking for money, and they're in the same situation you were with AmpMe: They originally were seeking less money, and now they're bringing in more. Does that impact whether you want to invest?

As an investor, I'm interested if it doesn't change the pre-money valuation of the company. I'm fine with it because it doesn't really affect my net worth in the company. Maybe I'll have a smaller percentage but that percentage will be worth a little but more money.

How often can a startup actually raise more money than they'd originally planned? AmpMe's story makes it sound easy.

If the stars align, you can take more -- and they probably only align 10 percent of the time. Most of the time you're not going to raise as much as you would like. You're going to ask for $3 million in your round but you'll only be able to close $2 million. That happens most of the time. But if the stars align, you should take it.

So how can an entrepreneur make the stars align?

You know, there's no magical recipe. It's selling your dream, selling your vision. And then you've got to sell the exclusivity of that dream. Show people that they need to act now or they're out. As soon as they understand that, they want it more. It's kind of like dating -- if you push too much, it's not going to work. But if you really have the goods, and you have the right team, the right momentum, the right PR, the right market, I think if you show some exclusivity and some hard-to-getness, it might play in your favor.

Related: Should Your Product Be Perfect or Scalable? Can It Be Both?

When you set your limit -- "I'm only going to close $5 million, so you better hurry because there's not a lot left" -- and then the next day there's nothing left, I might push it a little more. Two days later, you tell investors, "I'm opening an extra $3 million. It's not going to be open for more than 24 hours, so you need to give me your decision now because everything's allocating now." So, you create that urgency.