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Practical advice for cyber security entrepreneurs. Learn from our experience.


15
OCT

Timing is EVERYTHING When Raising Capital for Your Start-up

The haze that follows in the moments following that big round of funding….. You feel heroic. Indeed it's an ego boost. Investors start calling you, and all of a sudden your team has more energy than ever before.

Raising funds too soon can be dangerous. Like everything in life, too much of a good thing can sometimes be a bad thing. The worst outcome from a premature round of funding is that it can stop you and your team from running lean.

Timing is everything

When you're starting out, it’s your creativity in that void that enables you to get your company off the ground. This is especially true for cyber security startups, where development talent can cost you hundreds of thousands of dollars on an annual basis. After fundraising, your commitment to the investors pushes you to advance quickly, but will prevent you from running a tight ship. You may lose focus while dealing with so many tasks now that you can afford to delegate to others.

Once you’re used to having an improved cash flow, you will find how quickly it gets depleted, and how soon you will need more to maintain all of the large scale systems you have put into place; the employees that are consuming payroll, the equipment that needs maintenance and multiple other processes (R&D and commercial).

Our advice: Try not to spend so much money on offices, developers, accounting and legal firms too soon. Stay lean until you've proven your model and are ready to scale. Learn the market, check your competitors, polish your message and understand your new cyber company’s value. You will be surprised at how far you can go with little or no money. The more money you save, the more of the company you can keep, the higher your company’s valuation will be, and the less time you'll waste.