The situations where it genuinely makes sense are recognisable. You have demonstrated that customers want the thing and can be acquired profitably, and the constraint on growth is capital rather than demand. You need to build something substantial before revenue is possible, such as manufacturing at scale or software requiring a long build. Or the market has a timing dimension where being second is materially worse than being first. Absent one of those, capital is expensive money solving a problem you do not have.
What it costs is not only equity. Outside investment brings obligations: reporting, governance, a board, expectations about growth rate, and an eventual expectation of an exit that returns the investment. That last one shapes every subsequent decision, because a business optimised for a sale in five years makes different choices from one optimised to pay its owner well indefinitely. Deciding which you want is the actual question and it precedes any conversation with an investor.
The technology consequences are real and arrive quickly. Investors expect financial reporting that a spreadsheet cannot produce, meaning proper accounting from the start rather than reconstructed. They expect metrics tracked consistently, which means the instrumentation must already exist rather than being added during diligence. They expect clean records of who owns what, contracts in order, and intellectual property properly assigned, which is where businesses discover that a contractor still owns the logo.
Due diligence is where inadequate record keeping becomes expensive. The questions asked are ordinary and the answers must be produced quickly: customer numbers, churn, acquisition cost, revenue recognition, contracts, and ownership of everything material. A business that has kept these well moves through it. One that has not spends months reconstructing, at cost, while the process stalls.
The preparation that helps regardless of whether you raise is identical to the preparation that makes a business well run. Clean books, tracked metrics, assigned intellectual property, and written agreements. Doing those because they might matter later is a poor motivation, and doing them because they make the business easier to operate produces the same result.