On Raising More Money Than You Need For Your Startup

Conventional wisdom suggests that companies should try to raise as much as they can as soon as they can in bull markets like the one we are witnessing now. The theory goes that a good market has to end, maybe very soon, which will worsen fundraising conditions for a bunch of years to come.

This seems a logical thing to do and we find ourselves giving this advice to companies too. Even if you do not need it yet, go out and get it now - it has not been so "easy" for a while and it might end as soon as next year.

The flip side of this is the following: if companies raise more than they need, they will start burning more than they would otherwise do. And if everyone follows this advice we will end up with an overfunded and "over-burning" startup landscape that is even more dependent on future financings to sustain the burn-rates and thus very vulnerable to market hiccups.

So I had this thought that this type of behaviour (raising because you can) might be what ultimately leads to trouble and that it is not smart advice after all. The smart advice seems to be: try to secure the money you need, or a bit more, but not much more, just because you can.