How To Wait Until The Time Is Right For Funding


Founder and CEO of ActiveCampaign, the Customer Experience Automation (CXA) category leader

Last year, my company, ActiveCampaign, completed Series C funding and raised $240 million. This came after a $100 million Series B funding round in January 2020. Prior to that, we’d taken very little investment. In fact, I’d turned down opportunities for other funding rounds at various points over the 17 years since founding the company. 

I’m not writing this to celebrate the fact that we’ve raised funds in recent years or give the impression that this somehow validates our business or catapults us to a level we weren’t at before. I don’t believe these things are true of funding rounds — and I don’t believe they’re a good reason for pursuing them. The most important moments for our business weren’t the investments that came in the last couple of years. They were the two decades before when we found ways to move forward without those investments. In this article, I’m going to discuss the value of not taking funding until the time is right — and share how we managed that.

The Right Moment To Take Funding Is When You Don’t Need It

It sounds a bit cliché, but it’s no less true for that: The right moment to take funding is when you don’t need it. The real trick is finding a way to get through all of the times when it feels like you do. Understanding the downsides of taking money earlier can help.

The most tempting moment to take funding is when it’s proving difficult to reach the goals you need through organic growth — and a cash injection seems to offer a shortcut forward. The problem is that taking money in these circumstances means you’ve effectively spent funds before you receive them. In most cases, the investment probably won’t increase your business options or agility. 

Taking an investment as a financial shortcut can also leave you subject to the rules of supply and demand for funding. If macroeconomic factors are behind your need for a cash injection, then they’re likely to be creating a similar need for other businesses at your growth stage. Crucially, it can also take away what I see as the most important gain from a successful funding round: having the ability to choose the right strategic partners who will open up new opportunities for your business.

We knew these kinds of partnerships were the real objective of any funding rounds for ActiveCampaign — and that’s why we waited to take on additional investment until there was a purpose for it that involved more than just capital alone, and we had the right parties interested who would help us with our next stage. That meant waiting until there wasn’t an obvious, pressing need for the money — because, at that point, we could demonstrate how our vision, strategy and culture could translate into growth. 

There Are Alternatives To An Investment Round

We chose to delay taking funding, but that doesn’t mean that not having the funding was an easy option. It meant that we had to explore a lot of other avenues to finance growth and keep things on track. On the face of it, these weren’t as glamorous or as affirming as being able to announce a big funding round, but we found that they actually delivered more value to our business in the long run by giving us more choice later. That’s why when I talk to business owners who are struggling to find funding today, I encourage them not to lose heart. At many stages of growth, outside investment isn’t necessarily the best option anyway. It’s certainly not the only one.

In our early days, we reached out for assistance from the U.S. Small Business Administration. We didn’t feel any stigma in doing so — because we were a small business looking to grow, and that’s exactly what the SBA’s packages of loans are designed for. We improved our cash flow by applying for cash advances on receivables (today there are numerous lending services that lend based on a monthly recurring revenue multiple), and designed incentives for annual and upfront purchasing. We worked as consultants to secure larger chunks of income than we’d get through the natural growth of our platform.

All of these are valid sources of funding for a growing business — and can help you delay investment rounds until the moment that you’re ready for them. Many of them also have the benefit of helping to evolve your proposition and operations in a way that’s financially healthy. If you can solve your funding challenges in part by designing your business around a stronger cash flow, then that’s a gift that will keep on giving for you.

The Real Benefits Of Funding Don’t Involve PR

In my experience, there are a lot of smaller businesses out there that could make greater use of other types of funding options, but don’t, because they’ve been seduced into thinking that high-profile investment rounds are the be-all and end-all for a startup. The media coverage of these types of funding events presents them as the ultimate validation of a business strategy — the moment that vaults it into the big time. They conflate public relations and the supposed brand benefits with the funding itself.

The truth is that money you secure through selling a stake in your business has no greater value than money you access through any other channel. Celebrating a funding round is rather like celebrating getting access to a credit card with a huge spending limit — and nobody writes headlines about that. I’ve found that the PR benefits are also hugely overblown. 

The real benefits of investment don’t come through convincing the media that you’re the next big thing. They come through the opportunity to build wider partnerships around a clear vision of the value you can generate. That’s something you have to earn in advance by earning the right to take funding at a time when you don’t need it. It involves some hard yards, but they’re worth it.


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