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 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
The slowest months for fundraising are January-March and September. VCs invest more and more as the year progresses. It’s not crazy to draw a parallel between this trend and the patterns quota attainment for salespeople in which the majority of sales arrive in the last two weeks of a quarter. VCs aim to invest a certain amount of dollars and/or in a certain number of companies each year. The later in the year, the greater the time pressure, the better the motivation.
The data shows the average investment size spikes in August and December, both of which have over the past nine years, generated 15% larger rounds.Assuming a three month fundraising process, the best times of year to start a financing process is in September, targeting a December close, when investment sizes are 15% larger than average and investment volumes are 50% larger. Starting a raise in May is the second best choice. While the average investment sizes are identical to December, investment pace is much slower, hence a bit riskier.
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