It seems like there is no end to the supply of venture capital these days. Funding rounds are getting larger. The time between funding rounds is getting shorter. For the most part this is all good. As a general rule, my advice to founders and CEOs is: raise what you can, when you can. And now is definitely a time when companies can raise.
But…it’s important to be mindful of the path that you go down by raising more and more capital. In today’s land of plenty it can be tempting to double down before your company is truly ready. That can lead to issues if you don’t live up the expectations that come with all that money.
CBinsights recently reported a huge increase in the number of companies that have raised $3M *before* their Series A. As you can see, this trend is not specific to 2014. It’s been steadily rising for the past 3 years. There’s a similar trend for companies that raise $6M before series A. Read More