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When Should A Startup Avoid Fundraising?

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A very well known saying in the startups’ world is: “Raise money when you can, not when you need”. And yet, there is a stage in a startup’s life where I would avoid getting into the fundraising process. This stage is when you launch your product to the public.

On my previous post – The Hidden Costs Of Fundraising, I explained that fundraising is a very energy and time consuming process. Launching your product is almost the same. Assuming you know how to get some public attention, you’ll find yourself spending endless hours on answering emails from users, potential business partners and hopefully journalists.

Another similarity between fundraising and launching your product, is that they both require the founders’ attention. As a founder, your are the face of the company and therefore people will usually insist on communicate with you. Therefore, trying to launch your product and raise money at the same time, would probably end with failing at both.

Another reason why I wouldn’t try doing both simultaneously, is that investor would usually wait with the investment until they see how much traction your product gets and whether the traction is sustainable over time. Since most companies that launch a product get some initial traction and then lose momentum, it usually a better strategy to raise money before launching the product.

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