To think about before you spend a lot of time, effort, social capital, and money trying to raise funds.
The woman sighed. “I said I wish we never raised the money,” she whispered guiltily.
She had just described the ultimate startup fairy tale gone horribly wrong: a seemingly magical offer of funds from a wealthy and connected fairy godfather investor turns into a devil’s bargain overnight. It’s not always the right time to raise money. Financing rounds get so much publicity it seems like everyone is always raising money, and therefore you should too. But that’s simply not the case. Before you even start, you should carefully think through whether it’s a good time to raise money.
Many companies tell me they want to raise venture capital investment, but the reality is it’s not a good fit for them, including a lot of highly-profitable, successful companies. If your startup is not a good candidate for venture capital, fear not – all is not lost. Your company may still be an excellent candidate for an investment by another type of investor, such as a strategic partner or an angel investor with a personal interest in the industry.
The reason – as with all relationships – is all about trust, and trust takes time to build. Investors are handing over money, and for anyone, that takes a significant degree of trust.
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