John Mullins

Drawbacks continued: 3. Risk: The further you progress in developing your business, the lower the risk, as early uncertainties become more certain. Less risk translates into a higher valuation and a higher stake for the founding team. 4. Baggage: The terms and conditions attached to institutional capital are (for good reason) onerous, as investors seek to protect themselves from downside risk. The further along the path, the less onerous the baggage. 3. Difficulty: raising capital, even in the best of times for the best aventures, is a difficult task! Why make it even harder by trying to do it too early? 

there are significant drawbacks to raising capital too early: 1. A distraction: Raising capital often requires full-time concentration, but so does starting an entrepreneurial business. One or the other will suffer when investment capital is sought. Why not raise money later when the business is less fragile? 2. Pitching vs. proving merit: Nascent entrepreneurial ideas, however promising, always raise numerous questions. Proving the merit of your idea (to yourself and to others), based on accumulated evidence and customer traction, is much more convincing than using your own wisdom and charm to pitch its merit.