The Worst Time to Raise Financing

If you ever plan to raise professional financing for your company, you should know there is a disastrous time during the year to raise venture capital. The general consensus is to leave yourself 6 months of runway before you start raising your next series. But you should always remember the black out periods when constructing your professional financing plan.

Mark Suster:

It is very difficult to raise venture capital between November 15 - January 7th. It is also very hard to raise VC from July 15 - September 7th.

These dates were chosen specifically for 2009, however they can be applied every year.

DO NOT raise money during these periods.

  • The week before Thanksgiving AND 7 days after New Years Day.
  • When kids are out of school for the summer.

Venture Capitalists take the holidays off. Like every other corporation, not a lot of headway is made during the months of November and December. In addition, venture capitalists want to spend their summers relaxing with their families. So, although the fish are jumping, the summertime is a bad time to raise money.

Maybe it's partially because many entrepreneurs are pre-kids and many VC's are post kids that VCs take off large blocks of time in the Summer? Who knows - but trust me (regardless of what anyone tells you) it's a true phenomenon.

The reason isn't that the venture capitalists aren't working during their time off. They work all year long. In order to approve a round of financing, many, if not all, of the general partners need to be around. Getting the partners together to make a financing decision during these blackout periods can be challenging. Since they are professionals they do investments all year long. These periods are the only time they get away from the office and spend time with their families.

Remember, it's important to build and keep relationships with potential investors all year long. Many venture capitalists advocate keeping your future investors updated to your progress, not just when you need capital. But, even if you have a great relationship with your future investors, remember the blackout periods.

Written: November 27, 2012

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