Many people think the rule of thumb is you should start fundraising when you're six months away from running out of money. But, ideally, you want to start before that. You never should be raising money when you're about to run out of cash, because investors can smell desperation a mile away. That means your valuation will be lower, and you'll end up giving away more of your company. Your power to negotiate goes right out the door when you have no real leverage.

Instead of making decisions under the gun, know there are plenty of ways to get more cash that don't involve venture capital. Partnerships, lines of debt, bank funding, and friends and family are all options. But you must understand when you'll need the money, and then make sure you have it before that time comes.