Final answer:
The right time to raise venture capital for a hyper-growth company is when it has a proven product, a solid business plan, and a readiness for rapid scaling. Early-stage investors are drawn to companies that have substantial growth potential and the capability to become significant successes.
Step-by-step explanation:
The right time to raise venture capital for a hyper-growth company is a critical strategic decision that depends on several factors specific to the business. Generally, companies seek venture capital funding when they have a proven product or service, a solid business plan, and are ready to scale operations at an accelerated pace. It is essential that the business has reached a stage where it can demonstrate the potential for significant growth and profitability to attract venture capital investment.
The fluctuation in venture capital investment year by year signifies the high-risk nature of this financing. For instance, venture capital firms invested over $48.3 billion in 2014, as per the National Venture Capital Association, highlighting the substantial capital available for investment. Early-stage investors like venture capitalists understand that many startups may not succeed but are willing to take the risk for the opportunity to invest in the next big success story, such as Netflix or Amazon.com.
Therefore, a hyper-growth company should consider raising venture capital when it can clearly articulate its growth trajectory, has secured a competitive position in the market, and can benefit from not just the financial investment but also the strategic guidance that venture capitalists often provide.