In which cases should you raise money given market uncertainty?

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A few common questions I’ve been asked recently are, “How should I think about fundraising given all the market uncertainty … What is going to happen?” “Will money still be available?”  “Are valuations going to change?” “Should I raise now or wait until later?” These are all good questions and I’ll share a few thoughts below.

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What path do you want to take?

Independent of the market uncertainty, raising money is not right for everyone. Which startup path do you want to take as the founder, knowing that there are multiple successful options?

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Can’t predict everything

There are so many variables around COVID, the situation in Ukraine, inflation, etc. Trying to predict how each of those individually and collectively play out can be maddening. Instead, plan for different scenarios and control what you can control.

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Be prepared

To the point on scenarios, I always like to plan for a best case/worst case scenario. If you are prepared for those, 95% of outcomes will be solvable. In times of uncertainty, it is often wise to conserve cash/burn until it becomes more clear how things play out and how the fundraising market will be affected. Build a great business with good metrics for the best optionality.

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Value in good partners

Lastly, having great partners as teammates, investors, and advisors can help you weather the storm. They can take the long view, provide the needed support, and ensure you make it through to the other side.

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So generally, make sure you have a plan to manage the cash you have in case things get worse. If you have the opportunity to raise some money at an appropriate valuation that gives you more cushion and peace of mind, that could be a good option. At the end of the day, don’t lose focus on building a great product that customers love. That is what will ultimately carry you to success!

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