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Fundraising is one of the trickiest parts of building a startup, and Travis Kalanick, the co-founder of Uber, knows this all too well. So, what’s his golden rule? Wait as long as you possibly can before seeking funding. Sounds simple, right? But there’s more to it.
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Kalanick advises seed-stage startups to scrap and stretch. Push your resources to their limits. Take your product and traction as far as they can go before even thinking about raising money. Why? Because this strategy sets you up for the best fundraising process possible: faster, more competitive, and on much better terms. The further along you get without needing external capital, the stronger your position will be when investors finally enter the picture.
The Timing Trick: Don’t Wait Too Long
However, once you do secure that first round of funding, things change a bit. Kalanick points out that you can’t wait until your startup is on the verge of running out of cash—like having 10 employees and only two weeks of runway left—before starting your next round. At this point, timing becomes crucial. You want to keep pushing it, but not to the brink.
The sweet spot? When investors come to you. Kalanick says that if you’re making real progress, venture capitalists will eventually start knocking on your door. If they reach out, it’s a strong sign you’re in a prime position to raise funds. When VCs start pushing to get in on your next round before you're even asking, that’s when you know it’s time to get serious about your fundraising.
Real-World Examples: The “Unknown” Founders Who Nailed It
Many founders have followed a similar path and succeeded. For example, Peter Rahal, founder of RXBAR, bootstrapped his nutrition bar company for three years before selling it to Kellogg for $600 million. By waiting to raise money, he maintained control and built significant traction before getting attention from big players.
Similarly, Sara Menker, founder of Gro Intelligence, took a strategic approach by holding off on raising capital until her data-driven agriculture platform had enough value to attract top-tier investors like TPG.
Kalanick’s advice is a lesson in patience and strategy. If you can resist the urge to raise money early and focus on building something valuable, you'll be in a far better position when it's finally time to get those investors on board. In the end, timing is everything.
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