no matter how Your company is at a stage where raising money for growth is stressful, unpredictable, and a huge distraction from actually running the business. It has gotten worse over the past nine months as a volatile global economy has both public and private markets struggling for air.
I had a similar situation in late 2021. I was about 6 months away from my company’s Series B funding process, when it became clear that the global economy was rapidly deteriorating and I needed to reassess the timing of my next funding round.
Here are some of the steps my team and I took to analyze the situation and close a successful Series B:
My company raised a Series A in November 2020 at a time when it was accelerating investments in cloud computing and digital transformation initiatives. After about a year, the market began to turn noticeably.
Timing the market is impossible, but you should try to raise money when your numbers are good.
The initial signs are that public company valuations have plummeted, with some previously high-priced flyers losing 60%-70% of their value. It’s unclear how much of an impact this will have on VC investment, as many of the top companies have and still hold large amounts of dry powder on their books.
However, we assume that VCs won’t be able to get as many new deals as before, so they can focus more on and reinvest in existing portfolio companies. The pre-emptive offer was canceled in just one week of my funding process, and this assumption was validated.
While it’s important to get information from trusted sources, you ultimately have to decide when to raise capital based on all the available data and your intuition and experience as an entrepreneur. You must consider and analyze the company’s performance from an optimistic but realistic perspective.