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How to Know When to Raise VC Money

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 Four seasons in Japan

From Tomasz Tunguz, Redpoint Ventures

Aside from a startup’s internal considerations about the right time to raise money, founders should weigh the seasonality of the fund raising market when planning their

NibzNotes4

raise. There’s a rule of thumb batted around the valley that the worst times to raise capital are in the dog-days of summer and after Thanksgiving. As it turns out, this
aphorism is only a half-truth.

Below is a chart of the dollars VCs have invested by month of year. I’m using Crunchbase data since 2005 for tech companies in the US. There are a few notable trends in the data.

First, the impact of the summer is evident. The slowest month for investments during the year September. I’d estimate there are a few weeks latency in the data between when the investment commitment is made and the investment is disclosed. The legal diligence process of about 3-4 weeks that typically follows signing a term sheet introduces this lag.

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