Raising Capital Can Be Hard

December 12th, 2011 Leave a comment Go to comments

I invest in around 12 different companies and at any point in time one of them seems to be raising money.  When a company raises money they are either in a position of running out of cash and need a new injection to survive, they are on a rapid growth path and need new cash to accelerate growth or in some instances they need capital to fund an acquisition (and thus accelerate growth).

Capital raising is always a fun process.  You need to get the balance between valuing the company as high as possible to avoid too much dilution while at the time providing the new investors with upside.  However the balance of power is often driven by your current cash position and just how desperate you are to raise money.