Dear SaaStr: We Have a Ton of VC Interest But Are Profitable. Should We Still Raise?
Maybe, but don’t do it just to “raise”.
In general:
- Yes, if your balance sheet is weak. In general, you’ll underinvest if you have less than $1 on you balance sheet for each $2 in ARR.
- Yes, if your gut tells you you need it. Not just want it.
- But — Probably No if your balance sheet is strong and you’re not sure where to deploy it. It’s not worth it.
One caveat: if a lot is secondary for the founders and you’ve been doing it for a while, it’s often worth it. Just to destress your life and help you go bigger.
Many founders end up regretting taking capital they didn’t need in the end. More stakeholders, more seats at the table, less control, higher expectations.
This survey sort of reflects that:
Either way you’re in a great spot—cash flow positive, seed money untouched, and investor interest buzzing.
That’s the trifecta most founders dream of. But here’s the deal: raising now versus later depends on your growth ambitions and how much stress you want to take off your plate.
Reasons To Raise Now:
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Hire Ahead of Growth: At this stage, every great hire is accretive. If you’ve got the cash to hire ahead of demand—more sales reps, SDRs, engineers—you can accelerate growth instead of waiting for revenue to fund those hires. Don’t make that mistake.
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De-Stress Your Life — If It Does: Even if you don’t need the money right now, having extra cash in the bank can de-stress your decision-making. It gives you the confidence to make bolder moves—whether it’s launching a new marketing campaign, expanding internationally, or doubling down on product expansion. It’s not about spending recklessly—it’s about having a cushion to make smart, accretive investments without worrying about running out of cash. Roughly speaking, if you don’t have $1 in cash on the balance sheet for every $2 in ARR, you underinvest. This is perhaps the #1 reason to raise capital you don’t strictly need. More on that below.
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Valuation Timing: If investors are offering strong terms now, take advantage of it. Valuations can fluctuate with market conditions, and you don’t want to wait for a downturn to raise. If you can raise with minimal dilution—it’s often a no-brainer.
Why You Might Wait:
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You Don’t Need It: If you’re growing fast, cash flow positive, and scaling efficiently, you might not need to raise right now. Atlassian and Qualtrics waited until they were much larger before raising significant rounds, and it worked out well for them. If you’re confident you can bootstrap your way to the next level, you can hold off.
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Dilution Concerns: Even though raising now might seem attractive, you’ll give up equity. If you’re confident you might secure a higher valuation later, you could wait and raise at a larger scale. But this is a gamble—market conditions and investor appetite can shift quickly.
My Take:
If you’re seeing strong investor interest and can raise with minimal dilution and know how to invest the capital, I’d lean toward raising now all things being equal.
Use the funds to hire ahead of growth, de-stress your operations, and build a buffer for the future. Even if you don’t spend it all, having that extra capital gives you flexibility and confidence to scale aggressively. Just don’t over-raise or dilute unnecessarily—raise what you need to fund the next 24+ months of growth.
But don’t just raise because you can. That’s the trap.
One example from SaaStr Fund that is almost / at break-even but still raised $50m at $500m valuation recently, and why. They only raised it once they were 99% sure they were all-in to IPO, and more. To strap in for 10+ more years:
