When to Raise the Money...and Why

by Vadim Slavin and Steve Blank

Many entrepreneurs are asking us here at Startup Monthly: "when is the right time to raise the money?". This is a very valid question.  Given that it takes around 3-4 months to raise the needed funds for a young startup, founders have a dilemma on their hands. Start raising too late and they are running the risk of running out of steam. Start raising too early and the risk is that investor will be more skeptical and will ask for more in return.

Another good question is "why should I raise money from investors?". 

I was going to write a bit on this topic but Steve Blank wrote a great blog post: Fund Raising is a Means Not an End. I invite you to read the post in its entirety. Specifically, remember two take aways Steve is suggesting: There are two reasons to take venture money. The first is to scale like there is no tomorrow. You invest the dollars to create end-user demand and drive those customers into your sales channel. The second is the experience, pattern recognition and contacts that great investors bring to the table.

For a young startup seeking seed investments, I would point out that the second reason is more important at this early fragile stage. If this sounds like something you need, come chat with us at Startup Monthly.