The CEO’s time goes a lot into the raise capital campaign and that is what is needed for a company to grow. Without capital money production cannot be made and that is what makes the business tough enough. Fund raising is not easy at all and most of the processes go a long time before they are approved. There is a dilemma in the founders mind, should we raise capital when we can? Yes is the answer and do it as quickly as possible.
Now let’s take two examples to see which one makes sense and show that you should raise capital when you can:
Scenario A: if you are not giving up more of the company and you are still able to take more money then you should take the offer ASAP. You should talk with the investors and adjust the pre/post money valuation, size of the option pool and the possibility of having the same amount of ownership as before. This will end up with the investors owning less than you do and that is the correct relationship.
Scenario B: Raise more capital but get diluted more!
It is very rare that the investors will let you to dilute more but you should ask for it and put yourself and the company where the timeline is very important and push to the limit. You should seriously consider raising more capital always when this option is available. If you have a shorter runway to go, than you could run out of money quickly and then the real problems start.
You will not be able to have the step at the valuation as you want because it is hard when you are short on cash.
When the arranged financing starts you will have such longer runway to go and that leaves you open doors. You are not able to know how long the downfall will last and that’s why it is always better to raise capital when you can and where you can.