As a seed stage business, it is often tempting to raise money to give you business a kick start. More money means more options, right?
What experts such as Mark Suster believe, as well as myself, is that there is a fine line between enough capital and too much capital. Especially in the seed stage.
Think about it this way: Let’s treat the capital as rocket fuel and your business as a rocket.
If you add too much rocket fuel and light it up, it’s going to move incredibly quickly in the direction it’s aiming.
As a seed stage business you don’t really know where to aim it. To use an analogy of Stuart Cook’s: Your business is like a kid that doesn’t know what they want to be when they grow up.
If you take large investment you will:
- Feel pressured
- Lose options and agility
- End up with undervalued equity and over-dilution (eventually)
Not everyone needs seed capital.