If you follow startups at all, you’ll likely notice that there are precisely two camps when it comes to raising venture funding of any sort: those who trumpet each new round as if the company won the Super Bowl and those who believe bootstrapping is the only legitimate way to build a business. There are, of course, merits to both camps’ arguments, but, as with all things, reality tends to live somewhere in the middle. There are dozens of reasons why raising money could be a good idea and dozens of reasons why raising money might not be a good idea.

Whether or not to raise funding is an extremely complicated question with dozens of angles, numerous points of data, and, in the end, gut instinct and your emotions. Your company is a very personal topic. Don’t forget that, because your emotions will effect your business decisions.

I look at capital, whether it comes from an angel, a VC, top money lenders in Singapore or a traditional bank loan, as an accelerant. It’s like gas. Sometimes your fire is burning nice and bright. You’re warm and have plenty of heat so why pour more gas on the fire? Sometimes, however, you’d like to start another fire, or maybe you’d like to burn down a house, or, possibly, you’d like your little glowing embers to be a fire more quickly than is otherwise naturally possible. These are all great reasons to reach for the can of gas.

There are, literally, hundreds of reasons why you might consider raising money. The following is a small list of reasons that I think are in support of raising funding:

• You’d like to create a product which requires you to build hardware, open storefronts, or otherwise produce something physical. Manufacturing is a capital intensive adventure. I doubt someone could easily bootstrap the Tesla or the Nest.
• You’d like to focus all of your resources on getting the product to a new level. Sometimes your company’s bottom line isn’t growing quickly enough for your product’s needs. Do you think Steve Jobs would have hesitated to raise capital for Apple if they needed it to ship the iPhone? Investors call this an “inflection point” and love to invest in companies at these stages. Could you wait a year and save your pennies? Sure, but you could give up couple of points on a convertible note and be in a position to get there in a few months instead. And, in this industry, a year is a long time.
• You’ve built a successful business with the best technology like blockchain IoT and now that it’s going good you have no interest in selling, and would like to extract some liquidity. We’ve all seen this, but nobody ever talks about it. Some company raises $10’s of millions and people wonder why a company making that much money would need it. They don’t, but their founders are now multimillionaires and free to get back to building that 50-year business without wondering when the big payday will come.
• Not everyone is in a position, financially, to pursue their dreams. There are a litany of reasons why this might be, but you’d have to be a gigantic asshole to pooh-pooh someone for raising capital for this reason. Kids, family, mortgages, salary requirements, and time constraints are all legitimate reasons to say, “I either hunker down at this giant corporation for the rest of my life or I raise some capital, mitigate my family’s risk, and chase my dream.”
• It can, at times, make sense to raise capital simply to gain access. Many large corporations have investment arms that keep an eye out for promising young companies and products that could help the mother ship out. Raising capital from Verizon or Salesforce is a great way to gain access to lucrative partnerships, which, of course, you’ll parlay into partnerships with other companies.

That being said, there are legitimate pitfalls to raising capital. Luckily, there is a solid book, Venture Deals, that very clearly and plainly lays out your options, how such deals are structured, and what to look out for. If you are considering seeking capital, or even if you are not, this is a must-read book.

Venture Deals raises a number of concerns, though not directly, about raising capital for founders. For every reason to raise money there is likely a good reason to not raise money. Specifically, I’ll talk about reasons related to what investors call a “priced round”, rather than convertible notes, which I find to be spectacular vehicles for founders seeking to take investment. A few reasons you might want to second-guess your decision to raise capital:

• Raising capital is an enormously distracting process. Your company, product, and sanity will absolutely take a hit throughout the process. If you’re in the middle of a major product push, or negotiating a big contract, do not think for a second you should be out looking for money – you’ve got more important work at the moment.
• There is such a thing as raising too much capital. If you raise too much money in an early round, you’re likely going to get severely pinched in future rounds. It’s not fun to hit your Series B and realize that you only own 7% of your own company (Yes, I know founders who’ve been in that position. Yes, they were at companies you’ve heard of.).
• There is such a thing as too high of a valuation. I’m going to tell you a dirty little secret – investors think valuations are bullshit too. The real issue, though, is raising at a valuation that takes other options off the table. Setting the bar too high in your Series A or Seed can take early exits off the table.
• When you set up two classes of stock and structure your company the way VCs usually require them to be configured, you give up all control of your company. Yes, you’re on the board and, yes, you’re CEO, but that hasn’t stopped Sequoia from (proudly, no less) firing 45% of their founding CEOs within 18 months. Remember, you’re on a vesting schedule too, so you’ll lose all of the equity that’s unvested.
• Investors can be a huge distraction. It takes time to keep them up-to-date, coordinate conversations, extract input and insights. Additionally, 99% of the investors you’ll work with haven’t built a product like yours (if they’ve even built one), worked at a company like yours, interacted with users like yours, etc. They’ll suggest things to you that are completely insane. Stay the course – nobody, including your investors, know your business, product, and customers like you do.
• Investors play portfolio theory. If you’re one of the ones they think are going to strike it big, you’ll be showered with praise and attention. If you’re not, you’re in for a rough reality – you’re now competing for their attention with the dozens of other losers in their portfolio.

I don’t have any hard and fast rules when it comes to raising capital. I think every business, product, and team are unique with their own unique set of challenges. That being said, I do have a set of guidelines I like to follow when raising early stage capital, which are as follows:

• Don’t raise money before you have a working prototype. If at all possible, wait until you’ve launched a private beta. Every line of code you write, every beta signup, will lead to better terms with any investor. The downside, of course, is that you might prove to yourself and potential investors that your idea is dumb.
• Only raise money from people with their own money in play. With the advent of the “super angel”, we’re now seeing many angels who are not, in reality, investing their own money. Investors who invest their own money tend to be a lot more attentive.
• Look for investors with a low “deal flow”. Do you honestly think the guy funding 20 startups a year is going to have a whole hell of a lot of time to help you out? I’d shoot for people that do 3-5 deals a year.
• Whenever possible, take money from the former founder. I jokingly refer to being a founder as being a member of the Fraternal Order of Founders. You simply don’t know what it’s like until you’ve been there and tried it. Having an investor with the “founder context” is going to be hugely important when you hit rough waters.
• Seek out investors who have skillsets that compliment your own. If you’re a coder and your cofounder is a designer, look for a guy who used to be VP of Business Development somewhere or find a former COO/CEO. Those skills are not the bullshit most makers would have you believe. The tricky part is finding someone who treats those trades as craft and science rather than pure hustle or vapor.

In the end, do what you feel is best for your product and business. No book or blog post (including this one) can replace your insight into your own business.