The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “When’s the best time to look for investors?” is written by Feris Rifai, co-founder and CEO at Bay Dynamics.
You may be familiar with the old saying, “Raise money before you need it.” That’s a sound principle.
As you build your company, investors may reach out to you to set up a meeting. Meet with them — even if you’re busy and aren’t seeking funding quite yet. Doing so allows you to start conversations with the ball in your court (you can share as much or as little about your company as you want) and gives you time to learn about the different kinds of investors that are out there.
By maintaining an ongoing dialogue, when the time comes to seek funding, you will have more knowledge about what’s available so that you can make better decisions as you move forward. If you are far away from the funding process, you can simply tell them to reach back out at a future date. Either way, do not close any doors.
When I meet with potential investors, I always take thorough notes. I write down their strengths and weaknesses, what they can bring to the table by partnering with my company, whether or not they share a similar mindset, how they can help accelerate our growth and other attributes, beyond just money, that would make a good fit. Then when the time comes to look into funding, I select the few investors with whom I have had that ongoing dialogue to move forward.
I also recommend to not let the market climate deter you from opening doors to investors. Sometimes a “down” market is the best opportunity to seek funding. Take the recent Series B round we raised. The timing was right for us (we raised it well before we needed it), and it was the perfect opportunity to accelerate our growth as a company. When the market is “cool”, that’s the opportune time to turn up the heat. That’s when the strong get stronger and the weak get weaker. Use the downturn as an opportunity to add great talent, beat the competition and gain ground in the industry. Financing at the right time can help you with all of that. Your company can accelerate while others lick their wounds.