DREIESKIVA​|Roald Kvam

Securing the right funding at the right time can make the difference between a startup’s success and stagnation. But raising capital is more than just asking for money — it’s a strategic process that requires clarity, timing, and a strong foundation. From bootstrapping to angel investors, and eventually to venture capital, each funding stage demands a different approach, mindset, and level of preparedness.

In this article, we’ll explore the core funding strategies available to startups, what investors look for, and how to prepare for each phase of the fundraising journey — with practical tips to increase your investor readiness and long-term success.

1. Understanding the funding stages

Startups often move through different stages of growth, and each stage is typically supported by a different funding source:

a) Bootstrapping (Pre-seed)
This is self-funding, typically from the founder(s) and possibly close friends or family. It’s used to validate the problem, build an MVP, and get early traction.

Best for:

• Idea validation
• Early product development
• Proving commitment

Pros:

• Full control
• No equity dilution
• Builds discipline

Cons:

• Limited resources
• Slower growth

b) Angel Investment (Seed stage)
Angel investors are individuals who provide capital in exchange for equity, usually before the company has significant revenue.

Best for:

• Building a team
• Early product-market fit
• Scaling first operations

Pros:

• Flexible terms
• Often comes with mentorship and networks

Cons:

• Can be time-consuming to find the right fit
• Dilution begins

c) Venture Capital (Series A and beyond)
VCs invest larger sums into startups with proven traction and high-growth potential. They provide not just capital, but often strategic guidance and access to resources.

Best for:

• Scaling fast
• Expanding into new markets
• Hiring aggressively

Pros:

• Access to large capital pools
• Strategic support from experienced investors

Cons:

• Significant equity dilution
• Pressure for high growth and exit

2. Choosing the right funding strategy

There’s no one-size-fits-all. The best funding strategy depends on:

• Stage of your business
• Type of business (lifestyle vs. high-growth)
• Revenue model and scalability
• Capital intensity of your solution

Alternative funding sources to consider:

• Government grants (especially for R&D or impact-driven initiatives)
• Crowdfunding (equity or rewards-based)
• Strategic partnerships or corporate investment
• Revenue-based financing (pay a % of monthly revenue instead of equity)

3. What investors look for

Regardless of the funding stage, most investors assess startups based on five key factors:

a) The Team
Is the founding team capable, committed, and complementary? Are they resilient and coachable?

b) The Problem & Solution
Is the problem real, urgent, and painful? Is the solution uniquely positioned to solve it?

c) Market Potential
Is there a large, growing, and accessible market? Is the opportunity big enough for significant returns?

d) Traction
Have you shown evidence of demand, user engagement, or revenue? What signals prove progress?

e) Business Model
How will the company make money? Is the model scalable, defensible, and clear?

4. Building investor readiness

To be “investor-ready” means that your business is at a stage — and presented in a way — that makes sense for outside investment.

Steps to prepare:

a) Have a clear and compelling pitch
Your pitch should communicate the essence of your business in a few minutes.

Key components of a winning pitch deck:

1. Problem — What pain are you solving?
2. Solution — What is your product or service?
3. Market — Who are your customers? How big is the opportunity?
4. Business Model — How do you make money?
5. Traction — What have you achieved so far?
6. Go-To-Market — How will you reach customers?
7. Competition — What sets you apart?
8. Team — Who are you, and why are you the ones to build this?
9. Financials — High-level projections and KPIs
10. Ask — How much are you raising, and what for?

b) Know your numbers
Investors expect founders to be fluent in:

• Customer acquisition cost (CAC)
• Lifetime value (LTV)
• Burn rate and runway
• Gross margin
• Monthly recurring revenue (MRR) or equivalent

c) Conduct a financial & legal clean-up

• Incorporate properly
• Set up a cap table (capitalization table)
• Define equity splits
• Protect your IP (trademarks, patents if relevant)
• Get financial statements in order

d) Build social proof & momentum

• Press coverage
• User testimonials
• Key hires or advisors
• Awards, grants, or notable partnerships

e) Cultivate relationships early
Start building investor relationships before you need money. Engage with potential investors through:

• Startup events or demo days
• Angel networks and incubators
• LinkedIn or warm introductions
• Strategic partnerships

Fundraising is often about trust. Relationships increase your chances of a «yes» when you’re ready to pitch.

5. Timing your raise

One of the biggest mistakes startups make is raising either too early (before sufficient proof) or too late (when cash is nearly gone). Ideal timing is:

• After clear milestones (e.g. MVP launch, first paying customers)
• When you have a story of growth or traction to share
• Before your cash runway is under 4–6 months

Investors take time to evaluate and make decisions. Plan ahead.

6. Negotiating terms & avoiding pitfalls

Not all money is equal. The right investor brings capital, alignment, and support. Consider:

• Equity vs. convertible notes vs. SAFEs
• Dilution over time
• Board seats and control terms
• Exit expectations

It’s wise to work with a startup lawyer or accelerator who can guide you through this.

— — —

Funding is not just about capital — it’s about momentum, strategy, and partnership.

Whether you’re bootstrapping your way to traction or preparing for your first institutional round, your approach to fundraising must be intentional and aligned with your business goals.

By understanding each funding stage, preparing thoroughly, and approaching investors with clarity and confidence, you set yourself up not just for a successful raise — but for sustainable growth.

Remember: The best fundraising strategy is to build something people want. The money follows the momentum. Let your vision be bold, your execution sharp, and your pitch unforgettable.