When raising money isn’t a good idea

I have been following the guys at e-spark in Scotland quite closely, and although this isn’t directed at any company I thought I could share some of my views on fundraising.

Generally raising money isn’t a goal that you should strive for. Start by working on a product, plan and business model and they once you have some feedback from lots of meetings with potential customers then you can consider if funding is required.

Some businesses such as biotech and high tech software probably struggle to get off the ground without any funding, although it is not impossible. SaaS seems to be an area that you can get customer traction without having to go through the normal funding rounds.

Most investors (VC’s or angels) would prefer to invest in as close to a ‘sure thing’ as possible (good luck!) so raising money later is no worse and in fact valuations for removing risk will always be higher.

So just because the guys next to you raise money, don’t let go of that precious equity until you either need to or are getting something back of value.

Having too much money can also be a very bad thing, giving you options to spend on marketing before the product is ready, grow the team ahead of the curve or remove that desire to succeed.

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