You raised financing for your early-stage startup and have enough money to last for some time. If all goes well, the funds will get you to the next value-building milestone in your business. However, the best laid plans may not unfold as you thought and you may have to bootstrap the business to reach that next milestone.
You’ll need to show new (and existing) investors that you can execute on your plan and that you have reduced the risk in the business. Existing shareholders will also want to see an increase in valuation.
If your startup is meeting its milestones and existing investors have money available for investment, they will likely participate in the next round of financing. Since investors tend to put aside a fixed amount of capital for each investment in their portfolio, they prefer to syndicate and bring later-stage investors into the deal to make sure that the company is sufficiently funded. This is common for companies (such as life sciences and drug development companies) that need a large amount of cash before they generate their own cash from sales, licenses or royalties.
So when do you start fundraising again? The answer depends upon the amount of cash you have on hand. For example, if you raised 18 months of cash and it takes six months (or longer in tougher economic environments), then you need to start fundraising within one year of closing on the most recent financing.
TSX listing requirements. Retrieved April 14, 2009, from http://www.tsx.com/en/pdf/TSXandTSXVenture_IndustrialRequirements.pdf.
NASDAQ listing requirements. Retrieved April 14, 2009, from http://www.nasdaq.com/about/nasdaq_listing_req_fees.pdf.