When to Raise Startup Funding
- Bonny Morlak
- Mar 18
- 3 min read
Updated: Mar 21
(And When to Wait) 🚀
Raising Too Early Could Kill Your Startup 💸
Raising money for your startup and getting rejected feels awful. I get it, I’ve been there. I’ve made mistakes, learned the hard way, and I want to help you avoid the same pitfalls. The truth is, funding isn’t just about how good your pitch is; it’s about when to raise startup funding.
Get the timing right, and investors lean in. Get it wrong, and they disappear. So, when should you raise startup funding? And just as importantly, when should you wait? Let’s break it down.
Stage 1: Validation (DO NOT Raise Yet!)
Why Timing Matters in When to Raise Startup Funding
The biggest mistake early founders make is pitching investors too soon. If you don’t have validation, no amount of money will fix your business.
What does validation mean?
✅ You’ve identified a real customer problem
✅ People are willing to pre-pay or commit
✅ You have proof that the problem is worth solving
At this stage, you do not need funding, you need proof.
What to Do Instead:
🔹 Talk to potential customers (a LOT of them).
🔹 Build a waiting list or get pre-sales.
🔹 Test your idea without an MVP, surveys, wireframes, even a Notion page can work.
🚨 If you can’t get traction without funding, funding won’t solve the problem. Fix the idea first.
Stage 2: MVP Build (FFF Round – Friends, Family & Fools)
Once you know there’s demand, it’s time to build an MVP. But who funds this?
The answer: People who believe in YOU, not just your startup.
✅ Friends, family, and early believers
✅ Founders who reinvest personal savings
✅ Small angel investors who trust your vision
But BE CAREFUL! ❌ Don’t wreck your cap table by giving away 10% for $10K, it’s a trap.
How to Fund Your MVP the Right Way:
💡 Use SAFE notes (Simple Agreements for Future Equity)
✔ No valuation yet
✔ No investor drama later
✔ Keeps your startup investor-friendly
Stage 3: Seed Round (The First Real Raise)
Now we’re talking. If you’ve hit these milestones, you might be ready to raise a Seed Round:
✅ MVP is built
✅ Paying customers exist
✅ Real traction is happening
🎯 Your ONLY goal at this stage? Not revenue. Not scaling. Just learning.
This is where smart angel investors, early-stage VCs, and accelerators step in. But don’t just take any money, take smart money.
✔ Investors who open doors
✔ Investors who have built companies
✔ Investors who add strategic value
🚨 Avoid a priced round at this stage! It’s too soon, and legal fees will drain your cash. Stick to SAFE notes to keep things clean.
Stage 4: Series A (Scaling Begins)
This is the first “big league” round, where things get serious. If you’ve hit the right growth signals, you’ll now attract institutional VCs.
📈 You should have:
Consistent revenue growth
Solid customer acquisition and retention
Metrics that back up your valuation
⚠️ Warning: Cap table mistakes from earlier rounds show up here. If you gave away too much early equity, you’ll struggle to raise.
📊 Healthy Founder Ownership at Series A:
✔ 50-60% equity = Good
❌ Less than 30%? 🚨 Investors will hesitate.
Stage 5: Series B+ (Scaling & Market Domination)
At this stage, you’re done experimenting, you’re scaling.
Investors now expect:
✅ Repeatable, scalable revenue
✅ Expansion into new markets
✅ Strong operational structure
If you raised smart from the start, you still own enough to control your startup’s direction.
⚠️ The #1 Fundraising Mistake Founders Make…
Most startups don’t fail because of bad ideas. They fail because they raise at the wrong time.
❌ Raising too early = Losing control, bad deals
❌ Giving up equity too fast = Cap table nightmares
❌ Raising without validation = Burnout & wasted time
What’s Next?
📥 Download My Startup Fundraising Guide – A step-by-step playbook for raising capital the right way.
📬 Join My Weekly Newsletter! Get founder insights, funding strategies, and exclusive resources straight to your inbox.
Want more insights on building a thriving startup without burnout?
👇 What’s your biggest fundraising challenge? Drop a comment below, I reply to as many as I can!
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