Funding in uncertain times: Charting your path to funding your startup
Knowing the key funding path questions to ask can help founders determine where they stand, the type of funding that makes sense for the stage of their business and how to engage the right investors at the right time.
The fundraising landscape has changed
Investor expectations have sharpened. Diligence cycles are longer, capital is tighter and there’s more scrutiny on team strength, capital efficiency, and time to next round. VCs are underwriting risk differently, looking for “fund returner” potential and founders who show real progress over polish.
New forms of capital are emerging for those willing to think beyond traditional VC. There are alternative capital providers who have the desire and capital to fund promising companies. Founders who plan well and prepare in advance of discussions get funded.
Understanding funding gaps and challenges
Some founders react to the market instead of navigating it. In a tougher climate, it’s easy to get overwhelmed, delay the raise or take the wrong money too early.
Many founders are also making the same mistakes:
- Pitching too early and treating investors’ responses as a “No” rather than a signal to refine their approach
- Sending cold pitches without context or clarity
- Lacking a compelling reason for the use of the funds
The funding path decision tree helps founders get proactive—mapping funding options to business realities, aligning team and strategy, and understanding what investors need to say yes. It’s not about chasing VC; it’s about finding clarity on what fits you right now.
Stages to determine your funding path
The following mirrors how real fundraising decisions unfold—they don’t happen in a straight line. Following these stages helps founders pause, ask key questions (“Do I need capital now, or is there a better option?”) and sort through what kind of capital aligns with their current traction, goals and runway. It also forces clarity around team readiness and investor fit so founders aren’t burning time chasing capital they’re not ready for.
Stage 1: Choose the funding type
Ask: Do I want to give up equity?
If NO: Use non-dilutive funding (e.g., bootstrapping, pilot revenue, grants). This is a good option if you need time to validate your model. Revisit this question when it’s time to scale.
If YES, ask: Does my company aim for VC-like returns?
If NO: Reconsider non-dilutive or angel funding.
If YES: Answer the following questions:
- How much runway do I have? A short runway means you must move fast or extend time via non-dilutive options.
- Is my team aligned on this approach? Lack of alignment on funding timeline and corporate vision is a prime cause of failure.
- Am I aligned with my ideal investor? Determine and evaluate their values, mission, whether they are high-touch or low touch, and what value they provide and can deliver.
Stage 2: Initial prep – Test with ideal investors
Use this stage to refine your investment strategy and gather intelligence. Start initial conversations with “friendlies” (e.g., past investors, potential future investors). Ask about:
- Timing: “I’m thinking of a fall close. What timing are you seeing in the market?”
- Terms: “I’m looking to use a SAFE at $7 million valuation with a 20% discount. What are you seeing with valuations in the market?”
- Connections: “What other investors would you recommend I connect with? As we build traction at this stage, what potential customers or decision-makers would you recommend connecting with?” If asked, provide specifics about who would make your ideal investor.
Stage 3: Go to market with investment
Follow this linear path:
- Build a lead list using referrals and research based on ideal investor profile.
- Develop collateral (e.g., pitch deck, one-pager).
- Source intros through friendlies and network.
- Hold investor meetings, iterating messaging based on feedback.
- Conduct cold outreach through LinkedIn and personalized emails.
- Process offers based on terms, strategic value and investor fit.
Hilary Kilgour