This was one of the key questions we had to address in a panel during last week's Red Herring 100 Conference in San Jose. While it's not an easy question to answer, the reply simply isn't just "when you need money". In fact, being contrarian is a good strategy when it comes to fund-raising. For example, Fund-raising in emergency mode only exacerbates the negotiation position.
While there are numerous variables that come into play in answering this question, such as if the markets are on the rise or not, certain factors play an important role regardless of market conditions. If possible, raising money from a position of strong momentum significantly helps achieve a better outcome. For instance:
- Coordinating the fund-raising effort to coincide with a major technical break-through, closing a key business deal or distribution partnership, making or identifying a major hire, where the positive momentum you're creating could clearly benefit from the newly raised funds.
- To use Seth Godin's popular Passion-Pop chart, the cusp of either the passion or the pop curve, when traffic starts getting really viral, would be an ideal time
as well.
