Fundraising
With government programs and founders bootstrapping, we are pretty sustainable and only need a short term bridge loan to get us through the year. We are however, looking to raise seed money to help us accelerate growth. A VC that we are in discussions with stated they do a minimum of $400,000 in seed round. Our cashflow projection does not require that amount of money at this point, even in the worst case scenario. Should we do a smaller deal instead of going for that round, which would dilute us significantly at this stage of our startup. Or should we raise enough money for the next 2 years?
6
Answers
Business development, sales, and marketing guru
Absolutely. I would focus as much as possible at raising the least amount of money possible while still optimizing your businesses ability to execute on its strategy. Money isn't free, the cost is the equity, interest, etc.
Answered over 9 years ago
CEO at The Kemball Group
How will the money you obtain be "paid" back, do you want to make the payment in that way and can you afford to make the "payment" are the questions you should address to see if you are raising too much money from the wrong sources.
Answered over 9 years ago
Visionary, Strategic, Clear Thinker: Doer!
Have you thought about everything you need. I know the answer is always: yes. But I would take a little time and go over the numbers to make sure that what you need is covered. Play "what if". What if the sales cycle ends up being longer than expected. What if new technology comes along. What if we get too much business and have to expand rapidly. What if you have to redo the business process to make sure it scales. What if the "product" requires modifications in order to sell... and so on.
Once you have that best / worst case scenario, then calculate the cost of money whether interest or equity. Like anything, you want to go for the best value proposition.
Answered over 9 years ago
Outsourced CFO Services
You can certainly raise too much.
Although, I tend to not look at this question from the standpoint of dilution, as much as the impact of too much cash on a startup.
One of the things that makes a startup successful is that it is literally fighting for its life. This helps ensure that resources are used efficiently and only essential investment are made.
The availability of too much cash can lead to people becoming complacent and losing the required sense of urgency required in a startup.
Having said that everything is relative. If you need $300K and raise $400K that is not a bad idea, because it always goes quicker than you expect. However, if you need $300K and raise $2MM that is definitely not a good idea.
Answered over 9 years ago
No. 1 Bitcoin writer on Quora
Yes, you can raise too much money. However, if your startup has more than 2 people, $400,000 is definitely not too much.
When you raise funding, you should always look at runway for 18 months, keep that in mind.
Answered over 6 years ago
Mathematics teacher. Business consultant
It is up to you. It is good to have a goal and achieve that goal. What is important is that those that participate know what the money is going toward. Looks like you have done great work!!!!!
Answered about 6 years ago