When do you raise money?

start up questions

I have been talking with several first time *treps (entrepreneurs, wantrapreneurs, etc) who are very early in the fund raising mode.  What I really mean is they are not ready to start raising money and they are very excited to start raising money.

Rarely is there a need to raise money until you have a product, customers or some validation of what you are trying to do. There is no reason to talk to investors until you have these in place.  Sure you can talk to some angel investors and see what they say but most will say come back when you have product, customers or validation.

Spend your time working on the acquisition of customers and refinement of your product before spending time on talking/meeting with investors.  Raising money takes a lot of time and energy. Oh yes it seems like so much fun if you have not done it before and it feels good when you tell your friends you are raising money of your new startup.

Don’t let your ego or someone telling you to go raise money get in your way of creating a kick ass product. If you have a great product then you will be able to raise money much easier and it will not be a pain in the butt. Raising money can be fun when you don’t need it or you have a product that many people want to invest.  Which by the way rarely happens.

Go out and create a product that can be used by real customers as soon as possible and then start iterating on it to make it better and better… the money will follow sooner enough.  Product first, raise money second.

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