Say you’re thinking of raising money from investors (angels or VCs), when’s the best time to start the process? This is a trick question. The answer: when you don’t need the money.
Hopefully you’ve heard this before, but investors like to invest when things are going so well that you don’t need the money. Why? You’re doing great and have mitigated much of the business risk, presumably by being profitable and consistently signing new customers. If you’re not at this stage of the business, and an investor expresses interest but isn’t ready to invest, I’d recommend developing a routine as follows:
- Ask permission to provide periodic updates, which is a great way to show progress and dependability
- Choose a timeframe for the updates (e.g. quarterly) and stick to it
- Keep the updates short and to the point, with meaningful information (e.g. number of customers signed, revenue growth, etc)
- Always ask if it is OK to continue to provide these updates as you don’t want to be burdensome
Have you tried this? Does it work for you? What else would you recommend?
David Cummings on Startups 
I’ve found that investors are also more likely to invest if you have acknowledged their feedback and incorporated it into the business. Investors may feel inclined to invest if they have “skin in the game.”
Also, the idea of providing periodic updates is analogous to keeping an active network, which includes potential partners, employees, investors, etc.
Thanks Adam. Good point that this is applicable to other interested parties — not just investors.