Raising money should never be a goal itself!
Therefore: Raise As late as possible, as soon as necessary
Exceptions: Markets won on speed, regulatory demands for financial security
Convertibles (family, angels, loan) first, then equity financing (early stage VC) 📦
- Self-financing as much as possible is cheaper than external funding
- Equity funding is the most expensive form of financing
- If you need external funding, consider alternatives:
- Pre-payments by clients
- Crowdsourcing
- Loans, debt-instruments
💸
Valid reasons for raising capital 🏴☠️
- You have found (initial) product-market-fit and can grow faster with additional capital
- You have a complex product which requires significant upfront investment to get to product-market-fit (almost only applicable to hardware or healthtec)
→ You need to be able to something significantly different which helps the company move forward