Fundraising when you don't need it

"The best businesses raise money inbound, not outbound" - Avnish Bajaj As a founder, if you don't need the funding but capital is chasing you, should you still raise a round? Here's #AMatrixMoment with our perspective on fundraising when you don't need it. Tune in.

Rajinder:

What if I’m a founder and I don’t need the money, but a lot of capital is chasing me. Should I be adding to the round, should I be crowding out capital from investing in other competitors, what should I do?

Avnish:

You know its going to be a controversial answer, I use to tell people that you know, as a founder raising capital, it should be like Virendra Shewag, see ball hit ball, right? See money take money. Now, that’s the simple answer and that simple answer I actually believe in.

Assuming your business needs money, don’t optimize to say my business will need money one year from now and therefore I won’t take it today, then take it today. If you don’t it need now you can optimize on improve the terms. But best businesses raise money inbound not out bound.

And the best situations are those where you will get the terms you want. If your business doesn’t need money, don’t take it, but I’m very clearly of the view that business get money when they don’t need money and if you are seeing capital flowing towards you, you should take as much as you can within reasonable dilution.

Now, whether it crowds out competition, it might. I think the world has moved from this capital as a weapon and as a moat. So I don’t know how much of that will continue to be true, but the reality is in any sector category leaders gets differentiated over a period of time and more and more capital and brand names want to be attached to that and if you are one of them you absolutely should.