Starting a business is an exciting opportunity, but it can require a lot of capital. Raising money for your startup may be one of the most important parts of starting a successful business, but it can also be one of the most challenging. Although there are many ways to raise capital, knowing the right time to raise money can be beneficial for a startup. Learn more about some seasonal trends in venture capital.
Best Time of Year to Raise Money
What is the best time of year to raise money for your startup? While this question may seem like it should have a very straightforward answer, the truth is that it can depend on many factors.
The time of year when you raise money can have an impact on your fundraising process, but it’s generally secondary to factors like your stage of development and the overall market climate. That said, certain periods in the calendar year potentially could see more volume than others due to investor behavior, budget cycles, and seasonal dynamics.
Seasonal Trends in Venture Capital
Seasonal trends in venture capital (VC) investing can be influenced by various factors, including market cycles, the calendar year, and external events (such as economic shifts, holidays, or major global events). While venture capital is inherently driven by long-term investment horizons, certain seasonal patterns could still emerge over the course of the year. The following are some of the opportunities and limitations that may present themselves when raising capital during each season:
Spring
Pros
In the spring season, some investors may be beginning the year with new budgets and larger capital funding resources. In addition to larger amounts of capital, investors working at bigger companies may have also completed their first quarter reviews and may want to take the time to invest in startups. Finally, spring can be a great time for networking events and conferences where startups can pitch their ideas to investors and potentially make connections.
Cons
There are still some downsides to raising capital in the spring. Many other startups may be looking to raise capital at this time, creating a competitive market. In addition to more startups raising money, investors may choose to wait on investing until later in the year, meaning there may be less funds to go around for everyone because investors are making fewer investments.
Summer
Pros
In the summer, many investors and even startup founders are taking vacations or just taking it slower during these months, allowing the possibility for more focused attention to startups that are fundraising from the investors. Fewer startups may be fundraising during this time, and investors may be using this time to plan for the long-term. This could mean that startups are able to plan with investors through meetings and intentional time together while the slower season is taking place.
Cons
On the other hand, with investors being out or on vacation during this time, there may be slower or no responses to cold outreach or messages from startups. With slower activity also comes the potential for hesitancy when investing. Investors or companies may opt to put off larger decisions until after this season.
Fall
Pros
As the end of the year is approaching, investors may be looking to invest in startups with their remaining funds before the end of the year to meet targets. After the summer, fall brings investors back to work and they may be more focused during this time, allowing the ability to make quicker decisions compared to summer. There may also be more events during this season, like in the spring, where startups and investors can connect.
Cons
During this time however, investors may be dealing with pressures that come with the end of the year, leading to potential delays in investing and decision making. There is also the potential for more competition during this season due to startups wanting to raise as much as possible before the end of the year. This may cause limited attention and capital from investors.
Winter
Pros
Since startups typically aim to raise funds during the spring or fall, winter may be a quieter time to raise capital for your startup. If there are a good number of investors who are looking to invest in startups, this may be beneficial. There is also the opportunity for strategic timing in that some investors may be looking to make a final deal before the end of the year or right at the start of the new year, so an investment could move quickly.
Cons
The holiday season can cause major slowdowns because investors and startups could be traveling to spend time with family, creating a more difficult time to schedule meetings. In addition to travel, investors may not be looking to make any other deals at the end of the year because they want to wrap up their current investments. Finally, there could be a delay in investments to startups during this time due to the nature of an uncertain market going into the new year.
Key Considerations
While the seasons themselves can influence fundraising, broader market conditions (economic downturns, political uncertainty, industry-specific changes, etc.) often have a bigger impact on fundraising ability than the specific time of year.
The stage of the startup matters too. Seed-stage startups may have different optimal fundraising times than Series A or later-stage startups. Later-stage startups might find more opportunities in the fall when larger investors are looking to deploy funds.
Final Thoughts
The best time to raise money may depend largely on your specific situation, your investor network, and broader market conditions. Ultimately, timing is important, but it is not the only consideration. You may want to keep these trends in mind when you start thinking about fundraising for your startup.
Want to learn more about raising money for your startup? Check out the following MicroVentures blogs to learn more:
- From Idea to Investment: How to Efficiently Manage Fundraising
- How to Raise Money for Your Startup in the Private Market
- Decisions, Decisions: Raising Capital for a Startup
- Deciding How Much to Raise
- The ABCs of Equity
Are you looking to raise capital for your startup? MicroVentures may be able to help. Apply today to start raising capital with MicroVentures!
[1] https://www.grasshopper.bank/startup-founders-guide-to-networking/
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The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.
