Time & Money – Fundraising for VC When It’s Natural

When is the right time of the year to fundraise for a venture round?  There’s a lot of conventional wisdom disguised as insight which entrepreneurs follow about optimizing the timing of their fundraising.  It’s correct in principle, but in reality should be used as a guide rather than as a rule.

I hear all of the time that “you shouldn’t fundraise in the summer (especially August) because VCs are all on vacation.”  Or that “you shouldn’t begin fundraising prior to the winter holidays because they interrupt the flow too much that the conversations will lose momentum.”  Or even “you shouldn’t fundraise when ‘everyone else’ is fundraising” (like right after Labor Day or immediately after New Year’s) because there will be too many other companies coming in the pipeline spinning VC’s cycles.  All of these statements have merit to truth in them – many VCs are distracted during end of the summer, the holidays can disrupt an ongoing dialog, and too many other inbounds will cause a VC to be distracted. 

But I think that these fundraising rules of thumb are only truly useful all other things being equal – and in reality, all other things aren’t equal.  Frequently there are more important factors which trump this conventional wisdom.  All of the above are naturally occurring events which happen every year.  And if an entrepreneur is VC fundraising during those seasons, things may perhaps proceed slower.  Yet, if a company is going to successfully fundraise, it will happen regardless of timing, and it won’t happen if wasn’t going to anyway.  At the end of the day, I believe it will just a bit tougher to push the process forward at an accelerated pace during these and other non-ideal seasons. 

The situation which I think is worse is doing something unnatural – fundraising when the business itself isn’t ready for it because the timing is purely dictated by the calendar.  This approach can happen when a startup is raising capital too early, waiting too late so that it puts itself into a potential cash crunch, or in between milestones which would warrant a better valuation… all just to avoid these seasonal fluctuations.

Surely, it makes sense to take the calendar into account for fundraising, but don’t let the calendar take you somewhere you don’t want to go.  And if your company is ready to start VC fundraising just a few weeks here before Thanksgiving, then that’s when it’s the right time to start reaching out to schedule a few pitch meetings.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by About.com where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.

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