no matter what At the stage your company is at, raising growth funding can be stressful, unpredictable and a huge distraction from running the business. And the chaotic global economy has gotten worse over the past nine months as public and private markets struggle for air.
In the year I had a similar situation at the end of 2021. I was about six months into the Series B fundraising process for my company when it became clear that the global economy was rapidly slowing down, and I had to reassess the timing of the next round.
Here are some steps my team and I took to analyze the situation and close a successful Series B:
The difference in the year
My company raised a Series A in November 2020 just as investments in cloud computing and digital transformation initiatives are accelerating. After about a year, it became clear that the market was changing.
It is impossible to time the market, but as much as you can, you should collect money when your numbers are the best.
The first signs were significant drops in public company valuations, with some early high flyers losing 60%-70% of their value. It was unclear how much this would affect VC investments, as many of the top companies had and still have significant dry powder on their books.
However, we hypothesized that VCs will not be able to create as many new deals as they used to, so that they can focus more and reinvest in their existing portfolio companies. This assumption was confirmed when a prepayment offer was dragged into my funding process for just one week.
The decision process
While it’s important to get input from trusted sources, you should ultimately decide when to raise capital based on all available information and your instincts and experience as an entrepreneur. You should analyze your company’s performance through an optimistic but objective lens.