Looking for investment while still working full-time

I had it in my head (since I need my salary to pay my bills) that I would continue working full-time until either a) the business earned enough that I could quite or more likely b) we secured seed round financing so I could pay myself and my partner a livable wage.

I was at a networking event yesterday talking with another entrepreneur and he was certain that I had exactly 0 chance of securing any funding if I was only working on the business nights & weekends, that I needed to quit my job first before searching for funding. If I quit my job, I have about 3 - 6 months before I'm completely screwed and lose everything, and I'm on the cusp of starting a family with my wife, so I need to be a little more reasonable with this. It's not that I'm not dedicated (far from it) but I just can't afford basically to quit my job without supplanting at least a decent % of my income so I can make ends meet.

Although raising money while still working is doable, it's a lot harder (I'm speaking from the perspective of someone that's done it recently). I'm not saying you can't, but I am saying that you should go into it with eyes open.

1. Some investors will consider it a deal breaker. You'll need to learn to take it with a grain of salt - it's just that some people won't accept that you have multiple things on the go.
2. Expect to be freakin' exhausted. Raising money, especially while building the startup, even more-so if you're working full-time, is a time consuming job. I'd recommend you expect adding 15-30 hours to your work week to really succeed at it.
3. It's going to be harder because you have a partner. One of you will end up taking point on the fundraising activity, and if you're both working full time elsewhere, it may feel like the other is being left behind a little bit. You both need to be prepared for that.
4. You will need to take time off work - be sure you can manage that. Due diligence calls, interviews, pitches, etc. will typically involve business-hour requirements. You can't raise money on email alone, so be prepared to have it impact your work day. This means you'll probably end up cashing in vacation time or putting in extra time at the office to make up.

Some small things that will help with the process:

• a virtual phone system to take your calls and email you the voicemails (grasshopper.com does a good job of this)
• have a solid contact management system to keep track of all your deals and emails (highrise with their email dropbox features are perfect for this)
• a personal investor that you know that would count as a vote of confidence (even if they're just in for something like $25k, it will make a difference)
• a skype out account so you can make long-distance calls without using the office network or phone system (you don't want caller id to show your current employer, nor should you end up costing your employer long distance calls)
• an up-to-date and robust linkedin profile (just makes the networking easier). Be sure to turn off your activity stream notification of your current employer may think you're shoping around for work.

I agree that that "other entrepreneur" has exactly zero chance of getting funding only working nights and weekends. He has already decided he can't. You do not have to be him. There are lots of ways to demonstrate your dedication. Foolhardiness is not an appealing quality to investors. Be your true self: dedicated, realistic, hardworking, focused on the future. When you encounter the right financial partner (and I note from another one of your questions on the forum that you have quite a list) you will stand out.

Is there a reason you can't bootstrap and quit your job once you've got enough revenue coming in? That's what I'm doing now.

I don't see why you couldn't raise funding while still working? If your really work smart, you could get a round of funding. the founder of del.icio.us worked on the project until he picked up enough traction to raise a round, and then quit.

I would try to spend at least one night a week going to an event and networking with local angels. It sounds like you're early stage, which means people are going to invest in you and not your company or idea.

I have been in this dilemma for quite some time now. Thinking about my family, is my responsibility, so my decision should not put them at risk. Well at the end i knew i will need to work much harder and cut my sleep times, try to adjust my lifestyle to increase efficiency and all, because doing this job will at least give them security.

At the end the decision was between a little relaxed life and business(though the family security factor always lingers in your mind) and your business and a tough life with family security... I went for the latter and I have no regrets about it...