In an earlier blog, I had stated that the best time to raise capital is yesterday. Of course, this response does not mean that you should approach a firm at any time of the year. There exist rhythms and cycles when to contact a firm. Timing is key here.
There are two major time periods to reach out to a VC firm. When Fall approaches, the first cycle begins around the second week of September and ends just before Thanksgiving. The second cycle starts after the second week of January and ends near the end of June. Although these are not hard fast rules, these two cycles represent the management styles of a partnership of fairly successful investment firms. Many partners take extended vacations. A common travelling spot for a partner is fishing off the Alaskan coasts. Others journey through Europe or other exotic locales. These long trips, often at inaccessible spots, clearly dampen any possibility for the firm’s total management team to look at deals and agree on making the investments.
And since the firms operate as partnerships with limited partners, the common partnership management is to reach unanimous consensus on any investment being made. Generally, these meetings need to be face-to-face. An out of pocket partner will forestall any final determination or evaluation of a decision.
Another factor in the timing process is to consider the availability of funds managed by the firm. The closer the calendar reaches the end of the year, the size of the fund might be closer to depletion. Earlier during the Fall is far better than closer to Thanksgiving. The beginning of the New Year is easier than waiting until the beginning of the summer. Usually the funds are
replenished at the beginning of the cycles when there is more capital available for investments.
Still a start-up should not compromise on the quality of the work. Instead, the managers should take advantage of the down time to increase sales, clean up the paperwork, and begin to prepare for the beginning of the funding cycle. But if that start-up needs to increase its chances for funding, it should fully aware of the cycles.