How do you know when you’re ready?

“Árbol que nace torcido, jamás su tronco endereza.”

In June of 2013, I was sharing a demo of kernel with an accomplished Silicon Valley investor. I highlighted our intuitive user experience and short time-to-value. I mentioned our innovative product roadmap. And I explained several ways that customers could rapidly receive value from kernel.

Then I waited, watching the investor’s expression for her reaction.

“Nice progress,” she said, getting up to leave the room. “Best of luck and keep me posted.”

As you have already realized, this investor was not going to invest in my company. Over the next few days, I considered the reasons why the investor had passed on kernel. Did she not like our product? Did she not believe the size of the opportunity? A different reason?

Finally, a friend told me the real reason: we weren’t ready.

If you’re an early-stage entrepreneur, the truth is no one cares about your company. Investors don’t care until you can prove your product has traction. Customers don’t care until you can prove your product delivers value. Inertia is your adversary.

So the question is: how do you know when you’re ready to raise capital? As Paul Graham at YCombinator writes, the time to raise is “when you can convince investors and not before.”

However, the real answer is the market tells you when you’re ready.

If you share a demo with an angel and he’s not asking if he can invest in your company, you’re not ready. If you share a demo with an institutional investor and she’s not asking if she can introduce you to her partners, you’re not ready.

This test applies to customers as well. If you demo your product to a potential customer and they’re not excitedly asking to use your product, you’re not ready. Yet.

So the next question is: if you’re not yet ready, what should you do? As Paul Graham again writes, “persistence is the key.” So keep going and don’t give up. Let’s go!