When to raise money

As a prominent VC once told me, the best time for entrepreneurs to raise money is when they don’t need it. VCs can smell desperation a mile away. If you really need money, then you are by definition desperate and easily subject to a down round where your investors, and you, get crammed down.

So when there’s money out there and you have a strong business case to raise it, do it. Because you never know when the financial markets will turn and if you need money, you either won’t get it, or the terms will be onerous.

Of course, the flip side of this is the danger of having too much money too soon in a startup, a problem and post for another day.

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

2 thoughts on “When to raise money”

  1. This is true. It is also true that when you do need the money – don’t settle for less. If you really need a million, 400K will not do. I speak from experience.

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