Here’s an outline of what a startup founder can expect at each stage of raising equity funding. It’s a supply problem.”īut despite these challenges, thousands of startups raise funding every year, implying that the potential rewards outweigh the guaranteed strife and risk. Simply put, there are very few equity investors who have a check to write and there are 1000x more Founders with ideas to fund. “Equity is one of the most sought-after forms of capital for entrepreneurs, although certainly the least available. “Pursuing an equity fundraise means that, in exchange for the money they invest now, investors will receive a stake in your company and its performance moving forward,” Schroter says. In extreme cases, they may even choose to oust a founder, as famously happened with Uber founder Travis Kalanick. Those investors usually expect not only a financial portion of the startup, but also a say in how things are done. While most founders start with a small, intimate team, each round of funding brings on new investors.

Founders also find it difficult to do what is essentially two full-time jobs simultaneously: running a company and raising money for that company.Īnother challenge that arises with equity funding is that there are more people involved in running the company. This makes early stage investing crucial for all startup levels. However, it could also be much longer, particularly if they’re trying to raise during the summer months, when the fast-moving venture capital world moves at a slower pace.Īnd during that time, many startups find that the stress of potentially running out of money - or, in some cases, the stress of actually running out of money - to be extremely high. “I think there are plenty of people, depending on the size of the round that they are raising, how successful they’ve been in the past, how far along they are, what their metrics are, where that could be much shorter.” “I’ve always heard that the rule of thumb is three to four months to do a fund raise - or that you should at least allow for that,” Jenny Lefcourt, a founder and advisor who has raised over $100 million, says.

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