People starting ambitious new ventures, whether inside large companies or in their garages, often assume that the first thing they must do is raise some capital to fund their start-up. But there are significant drawbacks to raising capital too early Raising capital demands a lot of time and energy, distracting the founders from building the actual business. Raising capital too early means pitching the (still unverified) merit of the business idea to potential investors, rather than proving its merit among customers in the marketplace. Raising capital early leaves the founders with a lower ownership stake than might otherwise be the case, since most risks and unknowns are still unresolved. Raising capital early brings lots of baggage: tough terms and conditions that investors rightly require to offset the risks they take by backing an early stage venture. Raising capital is almost always very hard, and may not always be possible, particularly in difficult economic co