this post was originally shared on Linkedin by Amanjot,
"What is the right time to raise funds?
While I was trying to raise funds for my own startup somebody said to me that "the best time to raise funds is when you don`t need it"
Which is not the usual case as I believe the first round is the toughest to raise as afterwards you have experienced investors and they will be also making efforts on their end as they also want to grow their money.
Some first time founders start raising funds on their pitch deck, I dont know why but something is wrong with there entrepreneurs. They need to understand that they are not Elon Musk, they should try to become one to raise funds.
You should have the following before you start approaching the investors:
1. Balanced team
2. MVP
Is there anything else required in the list?"
Very true, great insight... for start-ups though, raising funds is often both planned and reactionary. When things go better than expected in the evolution cycle, it often leads to a cash-flow crunch. 2 of my clients are facing just this challenge. They have received more orders than anticipated, and so now they are busy raising funds to meet revised production forecast
If you are in a start up situation the first area that needs to be addressed is the formulation of a solid business plan and within the plan one of the key areas will be the need to have sufficient funds to have the business progress in a positive manner. This area will need constant revision as the unknown will "throw up" many surprises and one needs to be ready for these eventualities. The timing of fundraising is key and this should be addressed prior to the finalization of the initial plan. Afterall if there is an issue with fund raising then there will be the need to revise the original idea.