The Only Two Times Startups Can Succeed at Raising Money
Raising money for a startup is something I haven’t been able to demystify. The last time I launched a startup in 2012 I didn’t have a clue where to start. Now, 8 years later there is one particular part of the raising money puzzle I know for sure — Timing.
Timing is the one ingredient that you must nail if you want to succeed with raising money from investors.
To help bring clarity to this critical fundraising topic, we need to look no further than a blog post written by the founder and CEO of Buffer, Joel Gascoigne.
Gascoigne states:
What I’ve learned from talking with some very experienced and highly respected successful serial entrepreneurs is that there are only really two good times to raise funding. The first is when you have just an idea, and you’ve not even started to build. The second is when you have a product with good traction you can show to investors.
Gascoigne goes on to point out that first time entrepreneurs have a 0% chance at raising money at the idea stage. The reason is because investors are looking for serial entrepreneurs with multiple successful exits. Having a successful track record is the deciding factor for investing in an idea.
So for first time entrepreneurs, the only option you have is to raise money when your product has good revenue or user traction depending on your business model and market.
How much? Read this post for specific numbers you must hit before you have a good chance to raise money.
Also, please go read Joel’s full blog post to learn more about raising money as a first time entrepreneur.