I often meet with founders trying to decide whether it makes sense to raise capital. This is very refreshing that this is even a question. When I first got into the startup World 11 years ago, it was a given that you needed capital. Now, its a choice.
For SaaS businesses (my main focus), assuming you want to build a bigger business than you have today, and assuming you are not a control freak (i.e. you’re open to working with investors and not being in complete control) here is how I approach the business case for funding:
1.) How big is the market opportunity? Is it big enough to warrant bringing in outside capital?
2.) How stable, certain are the per user economics? If stable, then you are ready to think about funding.
3.) Are there dynamics in the market in terms of direct, indirect competition that suggest you need to move faster than you can by self-funding? If yes, then take in capital to move quicker.
Generally, if you have enough historical data to be comfortable about customer lifetime value, and you have a big market then its crazy to not raise capital. And for a SaaS business, all else being equal, it will be worth more if it is growing faster. So, the extra value can often more than offset the dilution from selling a portion of the company.
I am grossly oversimplifying, but at a high level this is the decision tree for most SaaS businesses considering whether to raise capital.