How to Raise Capital for a Startup

Here at ThatRound, we understand that securing funding is more than just a financial milestone because it’s the backbone of any startup’s ability to launch, grow and succeed. For first-time entrepreneurs, capital is often needed to bring an idea from concept to execution, covering expenses like product development, market testing and initial hiring. For established startups, funding supports scaling, market expansion and innovation, providing the agility to adapt to changing market demands and competition. Whether you’re at the seed stage, seeking venture capital or exploring alternative funding, knowing which route to take - and how to prepare - is essential to long-term success.

‍

There are various methods available to raise capital for a startup, ranging from bootstrapping, where founders rely on revenue, to grants and debt financing. For many startups, particularly those aiming for high growth, equity investing, raising capital through the sale of shares to investors, is a key avenue. This includes routes like crowdfunding, where equity is raised from smaller individual investors, and institutional funding, involving large-scale investments. At ThatRound, we specialise in equity funding, connecting founders with trusted fundraising services to help secure investment and drive business growth.

‍

‍

Why Raising Capital Is Critical for Startups

‍

Capital is the lifeblood of startup growth, giving businesses the financial runway they need to move beyond organic expansion. Without sufficient funding, startups often face stalled growth or collapse, with 38% of startup failures linked to cash flow shortages, according to recent studies. For early-stage startups, external funding provides essential support for product development, market entry and customer acquisition. As companies grow, capital enables scaling, team expansion and market competitiveness.

‍

The strategic use of funding is also essential in sectors like technology and biotech, where speed to market determines success. In highly competitive industries, well-timed investments help startups fund R&D, refine product offerings and expand geographically. Raising capital isn’t just about growth - it also signals market validation, showing that investors believe in the startup’s potential. However, founders must carefully plan their fundraising strategy to avoid pitfalls such as equity dilution and misaligned investor goals.

‍

How to Raise Capital for a Startup Focused on Growth and Scale

A well-timed capital injection can transform incremental progress into accelerated growth. Funding enables startups to build the infrastructure needed to scale operations, develop new products and enter new markets faster. Without external capital, growth is often limited to slow, revenue-based reinvestment, which can be insufficient to compete with well-funded rivals.

‍

Securing funding allows startups to hire specialised talent beyond their initial generalist teams, bringing in experts in product development, marketing and operations. For example, tech companies often require engineers or data scientists, while consumer-facing businesses may need marketing experts. Well-timed hiring ensures startups can execute their growth plans efficiently.

‍

Funding also drives geographic expansion by helping startups localise products, comply with regional regulations and establish distribution networks. Additionally, it supports continuous product development, enabling businesses to refine their offerings and address market demands. Without sufficient funding, startups risk falling behind competitors who can act more quickly.

‍

Startups with the financial flexibility to seize market opportunities and respond to shifting trends have a clear advantage. They can form partnerships, acquire users early and pivot when necessary. Agility is especially critical in fast-evolving industries, where timing can dictate success or failure.

‍

‍

‍

Validating Your Business Idea

External funding offers more than just financial support because it serves as market validation that investors believe in the startup’s long-term viability, too. This validation often attracts additional opportunities, such as strategic partnerships, customer growth and media visibility. When well-known investors commit funds, it builds credibility, creating a halo effect that can influence other stakeholders to get involved.

‍

Investor backing also instils confidence among early adopters and enterprise clients. Businesses that have secured funding are often seen as more stable and capable of delivering on commitments, which can lead to stronger customer engagement and larger contracts. This momentum helps startups scale more quickly, creating a positive feedback loop where growth and investor confidence reinforce one another.

‍

However, not all funding is beneficial. Misaligned investors can push for short-term gains at the expense of long-term growth, impose restrictive conditions or take excessive equity. Founders should carefully evaluate investor fit by considering factors such as:

‍

• Equity dilution: Will the level of ownership given up affect decision-making control?
• Strategic alignment: Does the investor offer valuable mentorship, networks or industry insights?
• Terms of engagement: Are there performance metrics or exit conditions that may create challenges later?

‍

Choosing the right investors ensures that startups can maximise the benefits of funding while avoiding conflicts that could derail their growth.

‍

Exploring Funding Options for Startups

Startups have access to a diverse range of funding options, but not every path suits every business model. Factors such as stage of development, market potential and growth strategy play key roles in determining the ideal mix. Founders must carefully balance short-term needs with long-term goals, ensuring they choose an option that supports both sustainable growth and risk mitigation. Understanding the benefits and challenges of each funding route is crucial to developing a strategy that aligns with business objectives.

‍

‍

Bootstrapping

Bootstrapping involves self-funding the business through personal savings, retained earnings or reinvested revenue instead of seeking external investment. Many successful startups, including Mailchimp and Basecamp, initially relied on this method, leveraging early revenues to grow steadily without external obligations.

‍

One major advantage of bootstrapping is that founders retain full ownership and decision-making authority, without facing investor-driven pressures to scale prematurely. Since bootstrapped businesses are typically focused on lean growth, they may achieve early profitability faster than externally funded companies.

‍

However, bootstrapping can also limit a startup’s ability to scale quickly. Without access to external capital, businesses may face constraints in hiring specialised talent, funding product development or expanding marketing efforts. Cash flow limitations often require difficult decisions, such as delaying key initiatives. This approach is typically viable for founders with significant financial resources or startups capable of generating early revenue. However, for capital-intensive industries like biotech or hardware development, bootstrapping alone may not be sufficient.

‍

‍

Equity Investment

Equity investment involves raising capital by selling shares of the business to investors who, in return, gain partial ownership and an equity stake. Common equity investors include angel investors, venture capital firms and institutional investors. This method is particularly attractive to startups aiming for rapid growth and expansion.

‍

Equity investors not only inject substantial capital but also provide strategic advice, industry connections and mentorship. For example, securing funding from a well-known venture capital firm can enhance a startup’s credibility, attract partnerships and facilitate future funding rounds. This combination of financial backing and strategic guidance is a key driver for high-growth startups.

‍

However, founders must be prepared to share decision-making authority as part of the trade-off. Dilution of ownership can limit control, particularly when investors hold significant stakes or board positions. Moreover, the process of securing equity investment is time-intensive, involving the preparation of a compelling pitch, legal support and investor outreach. Without careful planning, founders may face rejection or unfavourable terms that hinder long-term growth. Without proper preparation, founders may face rejection or unfavourable terms that hinder long-term growth.

‍

‍

Grants

Grants offer non-repayable funding from government bodies, private institutions or research organisations. Designed to support innovative, socially impactful or research-based projects, grants are particularly beneficial for startups in industries like technology, healthcare and renewable energy.

‍

A key benefit of grants is that they provide capital without requiring equity or repayment, making them ideal for startups focused on long-term innovations or R&D. Unlike loans, grants allow startups to grow without debt obligations or dilution of ownership, preserving their financial independence.

‍

However, grants are often highly competitive and come with strict eligibility criteria, limiting access to only those projects that meet specific conditions. The application process can be time-consuming, involving detailed proposals, technical documentation and reporting requirements. Additionally, grants typically impose restrictions on how the funds can be used, which may reduce flexibility when allocating resources to broader business needs.

‍

‍

Debt

Debt financing allows startups to borrow capital through loans, credit lines or bonds while retaining full ownership. This funding route is especially suitable for businesses with predictable cash flows or recurring revenue models.

‍

A key advantage of debt is that once the loan is repaid, the startup has no further obligations to lenders, unlike equity financing, which involves long-term shareholder commitments. Debt can be used to finance short-term projects, working capital needs or equipment purchases without relinquishing ownership. In some cases, government-backed loans offer favourable interest rates to reduce financial strain.

‍

However, debt financing comes with the risk of repayment obligations, which may strain cash flow if the startup’s growth is slower than expected. High interest rates can further exacerbate this risk, particularly for early-stage companies. Careful cash flow management and financial forecasting are essential to avoid overleveraging. Additionally, many lenders require collateral or personal guarantees, potentially placing founders’ personal assets at risk if the business fails to meet its obligations.

‍

‍

How to Prepare for Raising Capital

Learning how to raise capital for a startup begins with presenting a compelling case that highlights the company’s potential for growth and profitability. This requires strategic financial planning, strong market positioning, and a well-prepared pitch that reassures investors of the startup’s ability to scale, manage risks, and deliver long-term returns. Mastering these elements not only increases the chances of securing investment but also ensures founders are fully prepared to meet investor expectations with confidence.

‍

‍

Creating a Solid Business Plan

A business plan outlines the startup’s mission, growth strategy and financial roadmap. Investors use it to assess whether the business can achieve sustainable growth and adapt to challenges.

‍

Key components of an investor-ready plan include:

‍

• Market analysis: Insight into industry trends, target customers and competitors
• Financial projections: Revenue forecasts, cash flow models and profitability milestones
• Operational strategy: Plans for production, marketing and key hires

‍

A strong plan demonstrates scalability and risk mitigation, reassuring investors that the startup is well-prepared to deliver returns.

‍

‍

Building a Compelling Pitch Deck

A strong pitch deck visually highlights a startup’s value proposition, market potential and financial outlook. It’s designed to attract investor interest and provide key information concisely.

‍

Key sections include:

‍

• Problem and solution: Define the market problem and how the product or service addresses it
• Market opportunity: Show market size and growth potential
• Traction: Highlight key milestones, such as revenue growth or product development
• Financials: Present high-level forecasts and funding requirements

‍

Founders should focus on clarity and storytelling while using data and visuals to support their narrative. An engaging pitch helps investors quickly grasp the startup’s potential.

‍

‍

Demonstrating Traction and Market Potential

Traction shows that a startup has gained market validation and momentum. Investors view it as proof that the business model works and can scale.

‍

Examples of traction include:

‍

• Revenue growth from early sales or subscriptions
• User engagement metrics such as retention rates or active users
• Strategic partnerships that enhance reach or credibility

‍

Strong traction builds investor confidence, making startups more attractive for funding. Focusing on key metrics that align with investor goals ensures the business stands out.

‍

‍

Challenges of Securing Startup Funding

Raising capital can be a time-consuming and complex process that requires persistence, strategic planning and strong positioning. Founders face multiple challenges, ranging from investor scrutiny and competitive markets to external economic pressures.

‍

To successfully navigate these hurdles, startups must understand what investors are looking for and anticipate potential obstacles that could derail their fundraising efforts. The ability to adapt and execute a strategic funding plan often determines whether a business can secure the right investment or miss out on critical opportunities.

‍

‍

Navigating Complex Investment Processes

Securing external investment requires startup owners to demonstrate that their business is financially sound, scalable and well-managed. Due diligence is a key part of the process, during which investors meticulously examine a startup’s financial records, operational performance, market strategy and risk factors. This stage is particularly rigorous for startups seeking equity investment or large-scale venture capital funding, as investors want to minimise risks before committing significant capital.

‍

Negotiating terms and legal structuring is another challenge. Founders must understand equity dilution, control provisions and investor rights, ensuring they don’t give away excessive control or future growth potential.

‍

Missteps during this phase can lead to unfavourable terms or long-term constraints on business decisions. Tax-efficient schemes like EIS and SEIS can help attract investors, but startups must navigate the eligibility criteria and compliance requirements, which often require legal expertise.

‍

The entire process can take several months, requiring continuous preparation and engagement with legal advisors. Founders must also be ready to address on-the-spot investor questions and adapt their proposals based on feedback. Without sufficient preparation, startups risk delays, reduced investor confidence or failure to secure funding.

‍

‍

Standing Out in a Crowded Market

With thousands of startups vying for investor attention, differentiation is critical. Investors are inundated with pitches and typically look for ventures that offer something unique, whether it’s a disruptive product, an underserved market or a significant technological breakthrough. Startups that fail to distinguish themselves from competitors often struggle to secure investment, as investors gravitate toward ventures with clear competitive advantages and scalability potential.

‍

To stand out, startups must craft a compelling narrative that highlights their unique value proposition. This includes identifying what sets their product apart, how it solves a critical problem and why it’s positioned for success in the market. Strong storytelling, supported by data and market research, is essential. Startups should also demonstrate that they understand their competition and have a strategy to outperform or differentiate from them. Without this, even promising ideas may be overlooked in favour of startups with clearer positioning and stronger execution plans.

‍

‍

Economic Factors Impacting Borrowing and Investing

External economic conditions heavily influence the availability of startup funding. During periods of economic uncertainty or downturns, such as those caused by geopolitical events, inflation or recessions, investors may become more conservative. Debt financing becomes more expensive as interest rates rise, making it harder for startups to borrow. Similarly, equity investors may shift focus to lower-risk or later-stage investments, reducing funding options for early-stage ventures.

‍

Startups reliant on debt financing may face additional challenges if cash flow is insufficient to meet loan repayments during periods of higher borrowing costs. On the other hand, well-prepared startups that understand market cycles can time their funding efforts strategically by raising capital during favourable economic periods or securing longer-term funding that protects them from short-term volatility. Founders must stay informed about market conditions and remain flexible, ensuring they have contingency plans if investor appetite shrinks or loan terms worsen.

‍

Ultimately, navigating these challenges requires resilience, adaptability and a proactive approach to funding strategy. By preparing thoroughly and understanding both internal business dynamics and external economic factors, startups can improve their chances of securing the right investment at the right time.

‍

‍

How ThatRound Powers Equity Investing for Startup Founders

Here at ThatRound, we understand that navigating the fundraising process can be one of the most challenging aspects of running a startup. Whether founders are seeking their first round of funding or preparing for Series A and beyond, identifying and connecting with the right investors requires significant time, effort and strategy.

‍

Our platform eliminates inefficiencies by providing centralised access to fundraising services that help startups connect with the right investors. We make equity fundraising simpler, faster and more effective by enabling founders to compare and assess vetted fundraising services partners so they can partner with the ones and access resources most suited, tailored to their growth stage and sector.

‍

Our platform is designed to eliminate these inefficiencies by providing centralised access to vetted funding partners, streamlining the process and allowing founders to focus on scaling their businesses. We make equity investing simpler, faster and more effective by offering access to diverse funding options and pre-vetted resources that align with a startup’s needs.

‍

‍

Aggregated Fundraising Services Marketplace

‍

Understanding how to raise capital for a startup involves navigating a wide range of funding channels, including crowdfunding platforms, angel networks, investment clubs, institutional brokers, and specialist advisory firms. Many of these options operate independently, which can make them difficult to discover, evaluate, and compare—especially for first-time founders.

‍

For startup founders, managing this process alone can be time-consuming and overwhelming. ThatRound solves this by acting as a centralised marketplace, helping founders identify and connect with the right fundraising services in one place. The process of raising capital often involves approaching multiple funding sources, from angel investors and venture capital firms to institutional brokers and specialised services. For startup founders, managing these relationships independently can be time-consuming and overwhelming. ThatRound solves this by acting as a centralised marketplace, connecting founders with the right fundraising services in one place.

‍

Our platform brings together a diverse range of trusted partners, including angel networks, crowdfunding platforms, corporate finance specialists, and other fundraising services. Our platform brings together a diverse range of trusted partners, including angel networks, venture capital funds, crowdfunding platforms and corporate finance specialists.

‍

This aggregated model allows startups to explore multiple avenues without having to conduct independent research or network-building from scratch. By curating and providing access to a wide range of fundraising services, ThatRound helps startups connect with networks of investors suited to their growth stage and sector. For instance, through our platform early-stage founders can apply to angel networks who can facilitate introductions to angel investors. Similarly, growth-stage startups can access venture capital firms and institutional brokers through tailored fundraising services.

‍

This streamlined marketplace not only expands funding opportunities but also reduces the time and effort founders spend on identifying and approaching potential investors individually. With ThatRound, startups benefit from having multiple funding options available in one place, making the process more efficient and results-driven.

‍

‍

Diverse Funding Options

Every startup’s capital requirements are unique and a one-size-fits-all funding approach rarely works. That’s why ThatRound provides startups with a platform offering comprehensive tools, resources, and access to a range of fundraising services, allowing them to select the options that best fit their growth stage and goals. Whether seeking pre-seed investment for product development, Series A funding for scaling or late-stage capital for market expansion, our platform connects founders with the right mix of resources and services.

‍

We provide access to specialist fundraising services, including pitch deck consultants, investment advisors, angel networks, crowdfunding platforms and institutional brokers. These resources go beyond simply providing capital.

‍

They also offer strategic guidance, help refine business models and prepare startups to meet investor expectations. For example, pitch deck consultants can help craft compelling presentations that highlight market opportunity and scalability, while fundraising advisors assist with for example, pitch deck consultants can help craft compelling presentations that highlight market opportunity and scalability, while investment advisors guide founders through valuation negotiations and term sheets, thereby ensuring founders are well-prepared for investor discussions.

‍

This diversity of options ensures that startups can secure capital that aligns with their business strategy. By offering a range of funding services, ThatRound helps founders avoid over-reliance on any single method, reducing risk and ensuring long-term financial stability.

‍

‍

Time-Saving Platform

Raising capital can be a highly demanding and time-intensive process that diverts founders’ attention from building their products and scaling their businesses. Traditional fundraising often involves months of investor outreach, countless meetings and extensive due diligence.

‍

Here at ThatRound, we recognise that time is a critical resource for startups and our platform is designed to minimise the administrative burden of fundraising.

‍

We streamline the funding process by helping startups easily discover suitable fundraising services through our platform, reducing the effort spent filtering through incompatible options. While ThatRound does not provide direct investor matching, we offer startups a structured pathway to engage with services like angel networks, for example, allowing them to apply and gain introductions. 

‍

Our platform streamlines fundraising by giving startups direct access to a curated selection of fundraising services, reducing the inefficiencies of cold outreach and scattered investor searches. By simplifying the process of finding, comparing and engaging the right partners - whether angel networks, investment clubs or institutional brokers - our platform enables founders to progress through funding rounds faster and with greater confidence.empowers founders to focus on growth by providing the necessary tools and resources for efficient fundraising.

‍

The result is a structured, efficient process that allows startups to secure investment faster without the typical delays and inefficiencies. By reducing the time spent on investor searches and administrative tasks, founders can focus on what matters most - delivering value, achieving growth and scaling their business successfully.