Should You Announce Your Fundraise? Pros vs Cons

We're going to talk about something slightly different today. Usually, I cover the preparation and systems you need to run a successful fundraise. Today's focus is on what happens after you raise capital, specifically whether or not you should announce your fundraise.

You might think "Of course I should tell everyone about my fundraise," but my experience advising a TON of these processes has shown me significant pros and cons to publicizing how much $ you were able to raise.

What Does Announcing a Fundraise Involve?

After closing a round, companies typically write up a description of the fundraise, including the lead investor and highlights about the company. They’ll then broadcast this information directly to media outlets and distribute to PR distribution networks, enabling others to write about it.

The resulting headline will be something like, "Fundraising Fieldnotes announces a $10M round led by Adamant Ventures."

This publicity can certainly bring beneficial attention:

Pros to Publicizing Your Fundraise

The obvious positives of announcing your fundraise include leveraging the press and attention for hiring, attracting more capital, and gaining new clients.

• Recruiting: Knowing that a company has secured funding signals to potential employees that the business is stable and has growth potential, helping attract top talent looking for new opportunities.
• Additional Investor Interest: News of successful fundraising can often trigger FOMO and attract more investors. As your company gains legitimacy in the market, other backers may want to join in, hoping to capitalize on future funding rounds.
• Stakeholder Confidence: Existing investors, partners, and clients find reassurance in knowing that the company is financially sound.
• Marketing/Brand Awareness: With respected investors throwing their support behind your company, the added credibility can help open doors with biz dev and new opportunities.

However, it's crucial to consider your company’s unique circumstances and whether these advantages outweigh the potential downsides.

The Drawbacks of Announcing Your Fundraise

The most significant issue I see, especially in the earliest rounds of capital, is that founders often view fundraising as the end goal. Raising money successfully becomes a major ego boost they’re striving for. In reality, raising capital is just a step along the way.

If you can’t actually get real value out of the announcement, think about whether it really makes sense to blast it out. Some things to consider:

• Pressure to stay on the same path/inflexibility: Telling the whole world you’re building “Instagram for Cats” can prevent you from making necessary pivots or changes in strategy as you learn more about your customers and adjust to the market. I experienced this when I raised capital and stuck to the initial vision a bit too long when I should have made changes much faster.
• Competitive Attention: Shining a light on all the money you’ve raised, especially if it’s for something truly innovative and timely, can invite more competitors before you’ve actually built momentum and established substantive advantages for your company.
• Pressure to Perform: With public knowledge of the funding round comes increased expectations. Stakeholders may expect faster growth and more immediate results.

When deciding whether to announce your fundraise, think about it as a tool.

Are you prepared to take advantage of the additional traffic to your website?

If you haven’t already built a great mousetrap to convert that traffic into real customers, partners, or additional investors, then does it really move the needle for you?

Take a hard look at whether or not the distraction, effort, and outcomes of announcing your fundraise are really worth it. There will definitely be situations where it’s valuable, but that’s not always the case.

At the very least, don’t make a hasty decision- you can always decide to announce later. There’s no hard and fast rule saying you can’t delay your announcement until a year later when you’re better positioned to capitalize on the increased attention.

Be chased,
Jason