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Every founder, at some point, asks the same question: When should I start fundraising? Raise too early, and you give away equity for cheap. Raise too late, and you risk running out of cash before hitting critical milestones.
Photo: REUTERS
Sam Altman, former Y Combinator president and OpenAI CEO, has a simple answer: Raise when it’s easy—or when you absolutely need to.
“In general, if you can raise money easily, and it's easy… that might be a good time to take it,” Altman explains.
“And the other one, of course, is if you need the money.”
That’s the balancing act. You either raise when investors are chasing you, or when survival depends on it. But how do you know where you stand? Let’s break it down.
The Best-Case Scenario: When Investors Are Throwing Money at You
The dream scenario for any startup is when investors are desperate to invest. This is when you’ve built something promising, you have traction, and investors fear missing out on the next big thing.
Take Stripe, for example. In 2010, Patrick and John Collison built a simple API for online payments. Their early users loved it. Word spread fast in Silicon Valley, and suddenly, investors were knocking on their door—before they even planned to raise money.
Y Combinator’s Paul Graham recognized their potential and personally introduced them to investors. Within months, they had raised from Peter Thiel, Elon Musk, and Sequoia Capital with barely any effort.
Why? Because investors saw progress, demand, and a clear path to success.
Altman puts it simply:
“In general, you want to have progress to warrant the funding you need.”
If your startup is growing rapidly and investors are showing up uninvited, take the money on good terms while you can.
The Other Side: Raising When You’re Desperate
The harsh reality? Not every startup gets the Stripe treatment.
If you’re running out of money and still need to build more before investors get excited, you’ll have to raise under less-than-ideal conditions.
Think of Airbnb in 2008. The company had launched, but it wasn’t taking off. Investors weren’t interested. They were rejected by nearly every VC they pitched.
But they had no choice. They needed cash.
So, they got creative. Instead of waiting for ideal investors, they bootstrapped their way through by selling custom-branded cereal boxes—Obama O’s and Cap’n McCain’s—during the 2008 election. That stunt made them $30,000, which bought them enough time to improve their product. Eventually, Y Combinator’s Paul Graham saw potential, invested, and helped them raise real funding.
This is what Altman means when he says,
“If you need the money, you may need to do it no matter what the terms are.”
In other words, it’s better to take money under bad conditions than to run out of money completely.
How to Time Your Fundraise Perfectly
So, if you’re somewhere between Stripe and Airbnb, when should you raise?
Altman suggests waiting for two things to align:
You’ve made enough progress to impress investors – This could be user growth, revenue, or anything that proves your startup is worth betting on.
You actually need the money – If you can survive another 6-12 months without funding and continue growing, you’ll get better terms later.
If you’re seeing strong traction and investors are already reaching out, it’s probably time to take the money on good terms.
If you’re struggling and burning through cash, get creative like Airbnb—do whatever it takes to buy time until you can raise on better terms.
Final Takeaway: Fundraise from a Position of Strength
The worst time to fundraise is when you’re desperate and have no leverage. The best time is when investors are competing to invest.
But real startups don’t always have perfect timing.
So here’s the best approach: Make enough progress to raise on your terms. If investors are chasing you, great—take the money. If they aren’t, focus on building until you’re in a stronger position.
Because in the end, fundraising is not about money—it’s about momentum.
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