One of the most well-known stats in the startup/investment industry is that a funding round should be sufficient for 18-24 months before the next round of financing is raised. However, a deeper look at the data offers a different perspective.
To get a clearer picture of the median time between funding rounds, we leveraged our extensive database on the Israeli tech ecosystem and analyzed 70 successful companies that “survived” long enough to raise at least a “C” or “D” round.
The following graphic reflects our findings:
This data – which is highly reliable and based on real numbers – shows that the general time between funding rounds is less than 15 months!
We believe that the trend revealed by this data is the result of three main phenomena we are seeing in the industry:
The mantra of “raising when you can, not when you need” is being executed well by CEOs of the successful companies.
The availability of capital in the industry – particularly growth capital – and the increased competition from the investor side, creates more “preemption” rounds in funds that are trying to “win the deal” by offering to inject capital into a company even before the company is officially “fundraising”.
Companies experiencing high growth are being pushed by their boards to spend faster in order to grow faster, so the real capital needs may be higher than initially forecasted.
These data-based observations may be indicative of a new trend in fundraising for the next few years.