Procrastination . . .

can sometimes help management retain more of its company’s equity. As a general rule, the longer a company avoids selling stock to outsiders the less stock it will have to sell in order to raise needed funding, and the less management’s stockholdings will be diluted. Put another way, the more management can accomplish without using outside equity, the better bargaining position it will be in when it eventually does look for venture capital.

There are two reasons for this. First, delaying the company’s need for additional investment shows prospective investors that management can make things happen and manage cash flow wisely. Second, and more important, the more the company can achieve without outside help, the less risk an investor must take when he invests in the company.

Procrastination can also be deadly to a company’s funding efforts. Raising venture capital takes time. Three to six months is not unusual. Once company management decides to raise outside capital, it should begin its efforts in earnest. See: Cash Flow, Dilution (Percentage), Stage Financing.