Traction is here. Raise funds or keep growing organically? That's the question...

Hello all,

Throughout the years, I've been privileged with creating startups that worked and exited and also to support fellow entrepreneurs through various circumstances.

One of the big question that arises systematically at some point is: "My startup is starting to get traction (users and/or revenue) - should I raise investors money to accelerate?".

Because it's a fair question, and because I've had it asked so many times, I thought I would share some personal views on the topic.

1 - Ask yourself: "What for?"

What I mean here is that it's obvious that money can bring speed of execution. This is not the meaning of the question.

The meaning is: would raising funds help me achieve my own objectives?

Raising funds means shareholders involved. It brings a whole new level of expectations, views, and to some degree pressure on results in a given timeframe.
Whilst most of the time, things happen well (in the sense where shareholders understand your progress, your goals and agree with them), it can at times create frictions that just add to the overall ride.

If your business is a steady-growing, cool-pace one and you are happy/fulfilled with that, then nobody says you have to raise funds. Just keep doing what you enjoy doing as well as you are doing it, and you'll be just fine. The "hype" of raising funds is ... exactly that - a "hype".

On the other hand, if you consider you are bootstrapping and you really want more (faster, bigger), then you should consider raising money. Just be prepared for a new game.

2 - "Which money?"

We all read around that "not all money is good money". But what does it mean?

Well it means that money comes with strings attached. It's provided by people or institutions. And these stakeholders (becoming your shareholders) can have 3 types of effect on your business on a daily basis:

  • None: it's called "passive money". You have the cash, you are supposed to execute a plan, and these shareholders will simply look in the end at whether or not you met your promise.
    Benefits: peace and quiet for you to execute.
    Downsides: do not expect any help, support (intro to new clients for instance) or actions from them. Also - if in the end you did not achieve your goals, you might be faced with anger.

  • Positive: These shareholders understand the risks you are taking, your views, strategy and objectives. They will support you and be active.
    Benefits: More horsepower.
    Downsides: Could potentially lead to a "collegial" management of the strategy and actions. You do not want to become "employee" of your shareholders.

  • Negative: A know-it-all shareholder that completely interfere with your business and not in a good way: 3 questions per day, micro-reporting demanded, challenging everything that is being done.
    Benefits: None. None whatsoever.
    Downsides: They can ruin your business.

So - not all money is "good money". How can you tell which is which?
Well - unfortunately, you cannot always. There are signs before signing the agreement. Discuss their views on how they see the relationship with you, their expectations, objectives in regards with their investment.

In the end it's a judgement call on your part. It's not rare - especially the first time - to get a bit of bad money in the mix. No drama though - if it's a minority, it is perfectly manageable.

3 - Do you have a plan?

Raising money to go bigger faster is one thing. Executing a properly planned strategy to do so is another.

The metrics you have showing traction are evidence of the market appetite for your product and your achievements so far. But they are not a guarantee in terms of how you will perform with a bunch of cash on your account.

If you do not have a proper plan (strategy, converted into objectives, broken down into milestones and activities, supported by a solid - and realistic - profit&loss model), then chances are you should not go for a raise just yet.

1 - Because you will not succeed. Investors expect to see and challenge the above, and expect to be convinced of your capacity of execution.

2 - Because you will waste time and maybe - which is far worse - loose credibility with potential investors.

Raising or not raising money. That is the question.

I'd be curious to know if some of you are questioning this at the moment. What's your take on it?


  1. 4

    Hi Stephane,
    this is a great post and I will recommend it to any other founder. 👏

    In the last nine years I had all those thoughts, whether to raise, or not, what it might bring, etc. And at the end settled on what you describe below:

    If your business is a steady-growing, cool-pace one and you are happy/fulfilled with that, then nobody says you have to raise funds. Just keep doing what you enjoy doing as well as you are doing it, and you'll be just fine. The "hype" of raising funds is ... exactly that - a "hype".

    What was always challenging was to resist the hype. Anxiety kicked in from seeing other companies grow faster and raise more, being featured in Forbes, etc. Anything that Startup-up hype introduces. But at the end, it did not matter at all (looking at it now). We are a small very productive team, competing with those who raised $300m+, still self-funded, profitable, rejecting investors on a monthly basis. Happy place with happy people.

    1. 2

      Hello Sotak!

      Thanks for your kind message.
      Good on you to have found the pace that makes you (and your team) happy! In the end, a happy business place will make your customers happy in turn, and will indeed allow you to build a nice and solid business. Congrats on your achievements!

  2. 3

    I think too many people think you need to raise funds in order to be "successful" because that's what's common with startups, maybe not so much in the IH community but generally startups.

    So this is a solid and balanced take imo and the right questions to ask.

    1. 1

      Thanks. And agree with you!

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