When to raise funds for your business?

series A funding image

When to raise funds for your business? Should you even raise capital?

When I talk to first-time founders, somehow they always want to talk about fundraising more than they want to talk about building a good product or finding the right customer.

This is a PROBLEM.

First-time tech founders think that Venture Capital is the ticket to success.

I’ll let you in on a secret, I used to think the same way.

Delay raising venture capital funds till the very last minute

VC-backed startups get so much press. But how many succeed? Reality…most don’t.

Let me tell you a little secret, it’s the serial founders who’ve already built one or more successful business that end up raising the most capital and get the splashy press on the back of a powerpoint.

Most first time founders struggle to raise VC. But that’s not a bad thing, because once you raise VC money, here’s what happens:

  • Your startup is not yours anymore, you go from founder to fiduciary (you’re responsible for other people’s money)
  • The time bomb starts ticking, if you’re not growing fast you’re going to get shutdown
  • You have less time to iterate and learn, results must come quicker
  • You spend a lot more time building budgets, financial plans and what not to keep your VC happy
  • You now have a board to manage, it can be a real pain in the ass if not handled right from day one

What’s the benefit of raising funds later?

Delay raising VC till you absolutely need to, and ideally only raise when you have product market fit and revenues.

By raising late:

  • You keep more equity to yourself
  • You give yourself more time and freedom to iterate and learn
  • You raise capital faster (given you have traction)
  • You don’t get distracted by the pressures of being VC-backed and can stay focused on your product and customers
  • Did I say you get to keep more equity to yourself?

Are you ready to raise VC? Get my free guide on raising on capital 👉 Click here to download

Recommended Articles