When to bring in an investor

If you have decided to raise investment after all, you need to think about when it is best to do so. As you know, a startup goes through several stages of development: it starts with the idea, then the idea is tried out and validated, then an MVP, a minimum viable product, is built, the first sales begin, and so on. The best moment to raise investment is considered to be the creation of the MVP and the first sales. This means that all the hypotheses the founder had in mind have been tested. The ones that failed have been discarded and rejected.

Only the successful hypotheses remain. They have been tested through small sales, and you have struck that very gold mine which has proven its viability. In other words, the car has been assembled, put on the road, is ready to go and has been through its break-in run. All that is left is to fill it up with fuel and drive straight ahead down the highway. That is a figure of speech. As for a startup, the moment of scaling is when, say, you have been working in one city in Kazakhstan, worked out all the details, and now feel that you can transfer the project in exactly the same way, without much effort, to other cities, or perhaps even to a neighboring country.

That is what is called scaling. Or if you have tested a particular business model and want to try, and have already tried, other models and other features, and believe that they can now be expanded and scaled. For that, all you need is investment for marketing, for advertising and for minor improvements. This moment is called scaling the project. And it is the best time to raise investment. Besides, raising investment at an earlier stage is not in your own interest as a founder, because at that point your company, your startup, will be valued by the investor at a small amount of money.

And, accordingly, the investor's contribution will mean a large share of your company. That is why it is not in your interest. So, the conclusion: try to go through as many steps on your startup's development path as possible with your own money and your friends' money, and put off bringing in an investor for as long as you can, because by then you will be more attractive to an investor, will accordingly be worth more in their eyes, and will therefore be able to get more money for a smaller share of the company.