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When is the right time to raise seed round - when you need it, or when you can?

A project I'm involved in received national attention last week. Including stories in major news-papers and TV channels. The media attention generated interest from investors. The company can either continue bootstrapping or use the interest and the media attention to raise.

Is the right time to raise, when you can? or the right time to raise is when you need it? (hopefully the need and can are the same, but not always)

8 Replies

Murali Sangubhatla
0
2
Murali Sangubhatla Entrepreneur • Advisor
Co-founder at 500 Miles
Hi Eli, Congratulations on receiving attention and coverage at such an early stage. Although, I am new to the startup scene, just wanted to pass along something I learnt recently from a mentor's advice as well from this book: (http://runninglean.co/)

>>
Even though you may need to raise seed funding sooner, the ideal time to raise your big round of funding isafter product/market fit,because at that time, both you and your investors have aligned goals: to scale the business.
>>

I think it is better to raise when you need it, not when you can.

Lokesh Kumar
0
0
Lokesh Kumar Entrepreneur
Cofounder & VP of Tech at Urgent.ly
If having more money in the bank would accelerate your plans - be it customer acquisition, product enhancements etc - then raise it. Also, having money in the bank gives you runway - you never know when the market changes or another competitor pops up that you need to out pace.
And if the investors bring some expertise that your team lacks (strategic investor), that might be worth it.
Running out of money is the ONLY real cause of a startup's demise - I have experienced it.
Stephan K. Thieringer
0
0
Stephan K. Thieringer Entrepreneur • Advisor
Chief Radical | Business Thinker | Executive Coach | Adjunct Faculty
Eli, You're in demand :-) and that can set the tone for the valuation as well as for the overall term sheet to your advantage. The question you should ask yourself and your team is if you actually need the money and more importantly if you had funds what would you do to what scale what you're not already are doing!? Also make no mistakes investors change the ecosystem of a company significantly. Happy to have chat offline. Stephan K. Thieringer US mobile +1 (617) 800-7262 World Connect +1 (617) 374-0400 skype ID stephan.thieringer This message may be a confidential and privileged communication to the intended addressee only. No spellcheck.
Arvind Goel
1
0
Arvind Goel Entrepreneur
CEO, Neobits, Inc.
Raise when you can, especially when you have this kind of leverage. You will certainly need the money at some point. Just make sure it's smart money.
Juan Posada
2
0
Juan Posada Entrepreneur • Advisor
Technology executive, startup advisor and entrepreneur. Also a garage tinkerer and maker movement supporter.
A mentor once told me that "If you have enough money in the bank, luck follows".

Obviously it was not meant in a literal sense, but especially for an early stage venture that may change directions a few times before zeroing in on the right one, having money in the bank (and the runway it provides) is its lifeblood.

In addition to runway, external money (especially when you have been bootstrapped) drives accountability and urgency, provides advice, opens doors, etc.

Raise when you can and more than you think you need.


Alan Matthews
1
0
Alan Matthews Advisor
Entrepreneur
The reason investors invest is because of the good idea, team, prospects for the company, market and NOT because you appeared in media.

You should always be looking to raise capital because it tells you how investors feel about all of the above. Maybe you're missing something. Your potential investors will tell you what it is; they'll value your company for you in a term sheet, or not. That's the most valuable information you can get so yes, look for capital every 18 months so you know how you're doing.
Ben Gamble
3
0
Ben Gamble Entrepreneur
Lead Developer at ViewRanger (Augmentra Ltd)
Media attention isnothingunless you are converting this into new users. If you are in development it is worse than nothing, as you have wasted your hype factor without a payoff, you are only new once.

If you need money go for it, If you can manage without, don't. Funding is for growth more than anything else, being popular and talked about only gets you past the first door.

The media glow will have faded by the time the partners/Angels to their due diligence on you, as it takes anywhere between 6 weeks and 6 months+ from hello to money in the bank.

Boot strapping will make you clearer on what is needed vs useless( you can't afford dead weight), and also allows you to keep control of your futures, Investors will tie you to artificial deadlines and targets.

Jorge Cortell
0
0
Jorge Cortell Advisor
Founder & CEO @Kanteron
Hi Eli,
While both "when you can" and "when you need" may be valid, depending on point of view, do keep in mind that when you raise capital, you dilute your position in the company, and you have to be accountable to more stakeholders. It may be what you want or need, or it may not, only you/your company can answer that.
In any case, if you go for it, make sure it's worth it. And like Arvind said "make sure it's smart money".
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