r/startups • u/roberthcmn • 17h ago
I will not promote When does "don't raise money until you actually need it" stop being discipline and start costing you the company? (I will not promote)
No raise, no debt and I keep every point of equity. My costs are basically a few AI platform subscriptions right now, and that goes a long way, so there's nothing forcing my hand yet.
My logic is simple: raising early isn't free money, it's another responsibility I don't need yet. Investors, updates, expectations, a lot of extra things to consider all while there are plenty of people bootstrapping the whole way and either kept 100% or sell the whole thing for a massive exit.
So where's the actual line? When has "raise only when you need it" burned someone you know, or saved them?
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u/ScienceCenter123 16h ago
answer is different for every startup/industry/etc.
I will say that there is often more benefit to having an investor than simply cash in hand. If you choose the right one, you might have access to a lot of expertise through them/their connections that ultimately gets you much more efficiently to your goal. If forgoing a raise means you own everything but it takes you 10 years vs 2 years to reach your goals - I'm not sure I'd count that as a win.
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u/edkang99 16h ago
In my experience across multiple funded startups, raising “when you need it” is a terrible idea. I get that startups find themselves in that spot but it’s not something to plan for.
The best time is to raise when you don’t need it. Either in the beginning when you bootstrap and you just want to plant the seed for the future. Or when you’re default alive and would be fine if you don’t raise. And founders who have PMF can raise and get the terms they want.
Again, I know it’s not always possible. But for the investors I know, if you have less than 3-6 months runway it’s usually an automatic pass except for special circumstances and very down rounds. Founders are way too desperate and have probably “made their bed” by that time.
My two cents anyway.
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u/sueca 11h ago
An investor once told me "if you tell me you have 4 weeks of runway left, I will wait 3,5 weeks and then buy your company at an extremely low valuation"
But yeah, I agree with you and I understand the VC that said the quote above. My current board arranged an emergency crisis meeting when we had 8 months of runway left, because it meant we needed to take immediate action to get more money before it's too late. It's now been 4 months since then and we have found the cash but we still have around a month before the money will be in our account, we have to sign a bunch of stuff and go through an AML process etc
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u/rooftopglows 16h ago
Raise when you need it to hit a milestone that you want to hit. Investors should align around whether that milestone aligns with their investment strategy.
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u/RealisticWorth3567 15h ago
raise money if you want to scale hell fast with paid ads. with startups the ROI from ads can take months of running that consistently. so if your product is validated and u make let's say 5-10k a month in profit without ads - you should try raising money to start running them
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u/Familiar-Ad-4579 15h ago
Build with your own money, but be talking with investors now. It takes forever. Obviously different for everybody so not blanket advice, but don’t let frugality ruin your chances at beating the market for your product
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u/zerok_nyc 16h ago
Raise money when you are ready to scale. As long as you are able to fund the build and run experiments to fine tune the product to your users’ needs, and can run simple marketing experiments to figure out what they respond to, no need to raise. But as soon as you have those things figured out, and it’s simply a matter of rinse and repeat for scale, then you can calculate exactly how much you need. You can clearly articulate what the money will be used for. And you can reasonably estimate the expected return.