Entrepreneurs can get overly obsessed with when’s the right time and the corresponding right price for their fundraise. It doesn’t matter whether it’s the first or the fifth round, the angst is just as high.
Why is this?
Well most entrepreneurs are optimists. They believe that their business is going to be worth a fortune and so they need to get the timing absolutely right, if they’re not going to throw away a lot of money.
In fact entrepreneurs delight in outdoing each other with jargon about angel rounds, seed rounds, pre A series seed rounds, VC rounds and with multiples based on x and y, and so on and so forth.
But behind the bullshit, it’s worth remembering that most start-ups never raise any investment, let alone successive rounds. So for the majority of entrepreneurs, the maxim of “keep it simple, stupid” may be more appropriate. In other words, raise the money when you need to, at the price that the market will bear – in other words at a price that real investors pay for. This means spending time testing your pitch and the valuation before you embark on the real campaign. After all, fundraising is like launching a new product or service, you need to understand your market and the market for your proposition, before you go live.
I think it’s incredibly easy to get caught up in other people’s fundraising, when in fact you just need to focus on your own. There is only so much one can control, so don’t look for the perfect time, just look to get it done on time, when you need it.