If you haven’t heard that statement from an investor, you haven’t started your fundraising adventure yet.
At the seed stage, you will hear “you’re too early” from at least 50% of potential investors who essentially say “no”. Let me also tell you, 90% of the time it doesn’t mean much at all.
Sure, “you’re too early” can be true from time to time. Maybe your company is too early for a later stage investor, but you can discern that fairly easily by reviewing the fund’s website for the type of deals they typically do. More often than not, this is a catch-all piece of feedback that seems reasonable, but isn’t necessarily additive. Investors typically have a ‘strike zone,’ but will bend their own rules. So what they’re telling you is – they’re not willing to bend the rules for you.
When it comes to early stage ventures, it’s all about risk. There could be too much product risk if you haven’t proven the ability to get a valuable, functional product in the market. Or maybe you haven’t proven customer demand. If you’re talking to a later stage investor, maybe you haven’t hit a revenue threshold yet.
But you’ve seen said investor do a deal that’s even earlier than your startup is. So you know you’re not actually ‘too early’. I’ve told you investors will bend their rules for a variety of reasons: they love a market, they love a founder, etc. They still have a wheelhouse and at least 80% of their deals are going to fall there.
So what can you do if you’re “too early”:
- First and foremost, re-evaluate the investors you’re targeting.
- Be less early. Figure out what milestones you can hit quickly (customers, product, users, etc.), leverage the assets you have to show progress in the company, and validate your likelihood to succeed.
- Stop fundraising…for now anyways. Find a way to continue the business without raising money for the moment and consider, Take some time and think, is the company really ready for venture capital?
The only mistake entrepreneurs can make in this situation is failing to recognize a pattern. We strongly encourage our Founders to take time to ask for feedback and even pursue it from investors, especially from those that pass on an opportunity because “it’s too early.”
Just like businesses need to pivot, fundraising strategies need to pivot. While constantly hearing, “you’re too early” may not be the most helpful feedback you can get, it does tell you something isn’t working. Likely meaning you aren’t targeting the right investors at the right time… Do this and one of these days you won’t be too early at all you’ll actually be on time!