How often and when should founders raise capital?

Mike Salguero · Apr 5, 2023

Founders should build on the side until they hit a concrete capital need, and raise then rather than raising because everyone else is raising.

At his first company they raised because TechCrunch only wrote about people raising money, so they assumed that was what good entrepreneurs did — and then the train wouldn't stop.

19:45 20VC: The Memo: Scaling to $600M Revenues with No Venture Funding, The Most In Detail Breakdown of Consumer Subscription Unit Economics & Why D2C and Consumer Subscription is Not a VC Backable Model with Mike Salguero, Founder @ ButcherBox

Zach Perret · Oct 16, 2024

Money is just a resource: you should raise it when you actually need it to solve the next challenge, and not before.

Plaid was profitable early and not spending much, so capital wasn't the tool needed at that stage; later it became the needed tool and they raised.

Scope: and raise in the most efficient way possible when you do

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Mamoon Hamid · Oct 21, 2024

You should not always be raising — a CEO's job is to ensure the company never runs out of money, so if you're well capitalized you should go heads down and build

The obligation is solvency, not continuous fundraising; with $300M on the balance sheet there's no need to raise

Scope: assumes the company is well capitalized

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Zach Perret · Oct 16, 2024

Raising money is largely a waste of time, so companies should raise as infrequently as possible.

Fundraising consumes founder time that could go elsewhere; Plaid went two and a half to three years between rounds while revenue grew.

24:12 Raise as infrequently as possible fundraising wastes founder time

Michael Eisenberg · Feb 8, 2021

Whether a founder should always be raising depends on the size of their competitive moat: with a low moat you cannot afford to lose the capital game, while with a high moat you may be advantaged by taking less capital

Taking less capital keeps you nimble and avoids having to modulate growth to catch up with valuation and capital-return expectations

12:22 Moat strength determines whether founders should always be raising

Dominik Richter · Dec 1, 2023

Their biggest fundraising mistake was starting processes too late, twice coming within days of having to file for insolvency.

Rounds always slip — things pop up, closings get delayed by two weeks then a month, a document is missing — and a founder has a duty to flag when payroll is at risk.

33:17 Start fundraising processes early enough to avoid near insolvency

Harry Stebbings · Aug 29, 2022

The interviewer holds that founders cannot align their fundraise to macro markets, since conditions may be worse in six or twelve months — if you need to raise, just raise

Markets could be worse in six or twelve months, so waiting for a better window is not a reliable strategy

10:27 Dont wait for better macro timing just raise when you need capital