We're in a strange place right now, sat in the middle of two pieces of startup advice.
Piece of advice #1: "The time to raise money is not when you need it, or when you reach some artificial deadline like a Demo Day. It's when you can convince investors, and not before."
Piece of advice #2: The best time to raise VC money is when you have product/market fit and need rocket fuel to grow.
We were having conversations with investors to suss out the London startup scene (we feel like outsiders mostly having kept ourselves to ourselves) and to make connections with industry leaders who might make great advisors.
2 Weeks ago these conversations suddenly turned into "Shut up and take my money.". Once this started happening, it happened at every meeting, with investors swiftly upping the amount they believe we should take... we have a herd all telling us to take their money. We haven't done a proper pitch to anyone.
We were aiming at #2 (product/market fit), and have stumbled upon #1 (convinced investors forming a herd).
The problem is expectations. We are at seed stage, and are developing the product/market fit. We have customers lined up, but we're not yet seeing good traction with the existing customers we're engaged with. We want to carry on improving the product, testing as we go.
If we take VC money we very much believe we'd be under expectation to focus on growth before the product is the right one for the market (it has a lot of promise today, but it's not yet proving itself fully).
Our current view is to to explain to investors/VCs that we're still seed and take the money only if it doesn't come with conditions and is understood we're still seed.
Not a lot of wisdom out there on whether you should decline VC money. We're not of the belief that all money is good, especially if it proves to be a distraction from just making the a great product that customers really want.
If you have the luxury to choose from multiple committed investors (and I recommend you triple-check your assumption that these people are indeed committed), then I would use that leverage to set the bar for your ideal terms. Importantly, terms can have many dimensions: in addition to the dollar amount and dilution, you can set expectations in terms of your stage, your focus, autonomy in changing direction etc. You can also filter by personal fit with the investor, how soon they hope for liquidity, their personal track record and reputation (not the firm's), etc. Just like a great hire, you should be wow-ed and be excited to work with them.
The more explicit the expectations, the better! Get to know them, ask them about their styles and priorities, check their track record with previous entrepreneurs (not just active investments! their loyalties may be mixed and they will lack the perspective).
It seems like you also have the luxury of not raising money at all for another X months (another assumption I assume you've quantified and triple-checked), so that makes it easy to walk away if the bar is not reached. Just like any other deal, your leverage is only as strong as your plan B.
I may be stating the obvious. In any case, good luck! "Shut up and take my money" is always a good problem to have.
Piece of advice #1: "The time to raise money is not when you need it, or when you reach some artificial deadline like a Demo Day. It's when you can convince investors, and not before."
Piece of advice #2: The best time to raise VC money is when you have product/market fit and need rocket fuel to grow.
We were having conversations with investors to suss out the London startup scene (we feel like outsiders mostly having kept ourselves to ourselves) and to make connections with industry leaders who might make great advisors.
2 Weeks ago these conversations suddenly turned into "Shut up and take my money.". Once this started happening, it happened at every meeting, with investors swiftly upping the amount they believe we should take... we have a herd all telling us to take their money. We haven't done a proper pitch to anyone.
We were aiming at #2 (product/market fit), and have stumbled upon #1 (convinced investors forming a herd).
The problem is expectations. We are at seed stage, and are developing the product/market fit. We have customers lined up, but we're not yet seeing good traction with the existing customers we're engaged with. We want to carry on improving the product, testing as we go.
If we take VC money we very much believe we'd be under expectation to focus on growth before the product is the right one for the market (it has a lot of promise today, but it's not yet proving itself fully).
Our current view is to to explain to investors/VCs that we're still seed and take the money only if it doesn't come with conditions and is understood we're still seed.
Not a lot of wisdom out there on whether you should decline VC money. We're not of the belief that all money is good, especially if it proves to be a distraction from just making the a great product that customers really want.