When should I start fundraising for my startup?

Full Explanation

Many founders raise too early, before they have validatable traction, and spend months fundraising without conviction from investors. Others delay until runway is critically short, negotiating from a position of weakness. The sweet spot is when you have: quantifiable traction (revenue, user growth, or engagement metrics that show product-market fit), clarity on what capital will enable (hiring, product development, market expansion), a defensible story (team, technology, market opportunity), and ideally, 12-18 months of runway. Pre-revenue companies can raise if they have exceptional teams, large markets, and clear use of capital (e.g., customer acquisition). For SaaS, hitting £10K-£20K MRR with strong growth trajectory often attracts serious interest. For marketplaces, demonstrating supply and demand are in balance with unit economics working is critical. For hardware, shipping a prototype and taking customer pre-orders helps. Different investors have different appetites: angels and micro-VCs will fund earlier (pre-revenue); traditional VC firms expect meaningful traction. The fundraising process takes 3-4 months minimum (closing longer), so starting 6 months before capital runs out is prudent. For founders in hot markets or with hot teams, more options exist; for others, traction is non-negotiable.

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