I’ve been pretty immobilized after eating what I think was a bad oyster last Friday. As I lay on the couch hoping that my chicken noodle soup would not leave my body, I thought a little bit about how it was probably pretty stupid for me to eat oysters out of season. A similar lesson may apply to raising venture capital… some times are not as good as others. It’s also important to note that just because it is a bad time to raise venture, it doesn’t necessarily mean that it’s a bad time to start a particular business. (I hope that this post won’t leave you feeling as sick as I currently do.)
In terms of actual months that add to the difficulties of raising VC, August and late December are pretty much gone. (This is as far as I can take the oyster analogy; the rest of the “times” have more to do with business trends…) Since raising VC usually takes at least a couple of months, you’ll want to start your dance with venture capitalists several months before, unless you are content to twiddle your thumbs while the investors are off at their vacation homes.
More important timing considerations are around both general and industry specific business health trends. If the overall economy has slowed down, then the fund raising process is likely to be unnaturally slowed as well (I mention this a bit in my post on Rackspace’s recent IPO.)
Your startup’s industry’s health is also important when deciding when to raise venture capital. Sometime when large companies struggle smaller, more nimble ones are able to make major gains in marketshare. However, convincing a VC that YOUR startup is the one that will make those gains isn’t easy, and will likely take a large amount of effort.
The health of your customers is also very important. VCs will call potential customers during the diligence process, and if they are very doom and gloom then some of that attitude is likely to rub off onto the venture capitalist’s thoughts…
Ok, back to me feeling a bit ill. Sorry for the half-assed post. Hopefully I’ll be back to making up more interesting things in the near future!
