No matter the At the stage your business is at, fundraising for growth is stressful, unpredictable, and hugely distracting from actually running the business. And it has gotten even worse over the past nine months as the turbulent global economy leaves public and private markets struggling to breathe.
I faced a similar situation at the end of 2021. I was about six months away from initiating the fundraising process for my company’s Series B when it became clear that the global economy was deteriorating. quickly, and I had to reassess the schedule for the next round.
Here are some of the steps my team and I took to analyze the situation and close out a successful Series B:
The difference of a year makes
My company raised a Series A in November 2020, just as investments in cloud computing and digital transformation initiatives were accelerating. About a year later, it was becoming apparent that the market was turning.
It’s impossible to time the market, but as much as you can, you need to fundraise when your numbers are great.
The first signs were the significant declines in the valuations of public companies, with some former frequent flyers having lost 60 to 70% of their value. It was unclear to what extent this would impact venture capital investments, as many of the larger companies held and still hold significant dry powder on their books.
However, we assumed that VCs would not be able to find as many new deals as before so they could pay more attention and reinvest in their existing portfolio companies. This hypothesis was validated when a pre-emptive offer was withdrawn only a week after the start of my funding process.
The decision process
While it’s important to get information from reliable sources, ultimately you should decide when to raise capital based on all available data, your instincts, and your experience as an entrepreneur. You need to consider and analyze your business performance with an optimistic yet realistic perspective.
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