When savvy founders with real businesses ask me if they should raise money from investors, my first response is always the same:

“Don’t raise money right now. Wait a little longer and gut it out.”

I know they desperately need additional cash to fuel product development, recruit leaders and accelerate revenue growth. Or just to stay alive.

I know that every growing software business with more than $1 million in revenue gets constant inquiries from institutional investors who sound very interested.

And, I know that everybody says you need to raise money now and that’s how you grow a big and successful company.

Unfortunately, the “standard” approach to growing a startup with outside equity funding is hurting more businesses than it is helping.

The problem is that too many startups are desperate for cash and too many investors are desperate to put their money to work.

Most founders are raising the wrong money at the wrong time for the wrong reasons.

Raising the wrong money with the wrong partner at the wrong time will almost guarantee your company won’t achieve your big vision.

In the rare case that you do succeed and grow a big company, the founders won’t have much of a life and employees won’t win much of a prize.

For most startup entrepreneurs, the best funding approach is no outside funding right now.

I’m not against raising serious investment money in the right situations, which are actually pretty rare these days.

I spent most of my 30-year career in software growing small companies into big ones with the help of Silicon Valley venture capital fuel.

Outside funding can be critically important for the right kinds of companies at the right inflection points.

In the last three years, I have met with over a thousand CEOs and worked with founders in over a hundred businesses all over the U.S.

I personally track every one of the 416 software companies in Arizona. I see the range of companies, not just the rare success stories we hear about that have runaway growth or successful exits.

I also hear from 90% of the founders who have raised money that they can’t say businesses are substantially better, or that they have a better chance of achieving their big visions and are closer to successful exits for themselves and their employees.

These CEOs feel trapped, stressed and guilty that it’s not working out.

What’s worse, a funded company often has fewer options to make the right strategic decisions, such as selling the company to an early buyer or taking time to let the product or the market develop.

Big funding and big growth are working out for a few CEOs who raised the right money at the right time for the right reasons.

But great founder-funding partnerships, great growth companies, and great exits are rare.

Having all three is very rare, but that’s the game everyone thinks they are playing. (That’s why they are called unicorns, right?)

The companies who are succeeding with outside investment didn’t need the money desperately when they raised money.

These founders were able to play the funding game well because they had patience, good advice and the ability to turn down the wrong investment partners and wrong deal terms.

They survived long enough the hard way to make the right choices to succeed.