In 2016 I introduced the concept of Got Get explaining why some startups gain momentum while others fall behind. My first post was about team-building. Here, I look at how Got Get applies to fundraising.

Always Be Fundraising (ABF)

Perversely, the best time to raise money is when you still have lots of it. (“Cash attracts cash,” as they say). The biggest reason for this is obvious: cash-rich companies can afford to be aggressive and drive top-line growth, which attracts investors looking for upside. A healthy balance sheet also lowers the real and perceived risk in a company. All things equal, most people would rather invest in (or work for) a company that has the resources to invest in big initiatives and still maintain a cushion for a rainy day.

The converse is also true. When finances are tight, companies tend to cut spending – usually in sales and marketing first. This inhibits revenue growth, making it harder to raise money. This can lead to a death spiral and make your company un-fundable.

Get out in front of the funding cycle

To avoid the death spiral, get out in front of the funding cycle. More to the point, think about fundraising as a continuous process, not an episodic event. If you are a successful entrepreneur, you will raise money many times; the best CEOs never really stop. A good CEO is always building relationships, honing her pitch, and honestly assessing her company’s finance-ability.

The time may be right to raise money – in which case you should be ready to pounce – or it may not, for a variety of reasons. If you have sufficient cash in the bank and your burn rate is under control, you have the flexibility to postpone your fundraising if you don’t like the way it’s shaping up. But if you wait until the last moment, you won’t have a choice. Your goal should be to manage fundraising as a long-term game, and always maintain momentum. You never want to let your company hit a stall point. (This is the essence of Got Get.)

Choosing the right financing for your business

In evaluating whether to pursue a particular financing, CEOs, founders and their boards need to strike the right balance between four factors:

  1. Shareholder dilution;
  2. The quality and fit of the new investor you’ll be working with for the next 5-10 years;
  3. The opportunity cost to the business of continuing to spend time fundraising, and/or continuing to sub-optimize the business due to cash constraints;
  4. The certainty of having money in the bank now, rather than hypothetical money in the future.


The best entrepreneurs and CEOs are constantly seeking the right balance between these factors.

Having said that, when there’s money on the table at a reasonable valuation, we generally advise our portfolio companies to take some. One thing we have learned at Amadeus over two decades of investing is that you never know when the funding spigot is going to turn off; we only know that it always does eventually. Market conditions can change on a dime. (Hello, 2008!) And regardless of what the market is doing, startups themselves are incredibly volatile, even the best ones, and their fortunes can change quickly. Generally speaking, better safe than sorry when it comes to raising money.

This doesn’t mean you should jump at the first term sheet, accept a valuation that is intrinsically poor, or work with the wrong partners just to have the cash. It does mean that you should accept the fact that your company’s financability will cycle up and down over time – often for reasons that are not connected to your company’s performance. Plan for this reality, and think about how you can maintain momentum through both macro fundraising cycles and your own company’s oscillations.

Planning your fundraising

A continuous approach to fundraising has several implications:

  • First, you should maintain good relationships with potential investors, and periodically update them on your progress, even when you aren’t officially fundraising. Among other things, this means taking rejection in stride. The VC that turns you down this round might just be the one that leads your next round.
  • Second, when you do decide to fundraise, be flexible. Sometimes you may choose to accept a lower valuation than you’d like. (Try taking a little less money to minimize dilution.) You may also choose to live with a few terms that you don’t love. (You may be able to renegotiate them at the next round.)
  • Last, you will likely spend more time on fundraising activities than you’d like. But in the end, the time you invest up front (building relationships with VCs, for instance) will actually save you time when you do choose to raise money.

Got Get is all about momentum, and fundraising is a critical element of maintaining that momentum. Think of fundraising as a long-term game, and constantly allocate some (even a small) portion of your time to it. It’s worth persevering through the difficult periods – and maybe even biting the bullet occasionally on an imperfect financing – so you are ready with a good story and strong metrics when the pendulum swings back the other way.

Pat Burtis is a Partner with Amadeus Capital. He is based in San Francisco, CA.