1. Understand What Type of Funding You Need

Before reaching out to investors, you need to define what stage you’re in and what kind of capital makes sense.

The 3 Core Stages of Startup Funding

• Pre-Seed: You’re validating your idea, building an MVP, or gathering early user feedback.
  Typical sources: friends/family, accelerators, angel investors, small syndicates.
• Seed: You have product-market fit indicators and early traction.
  Typical sources: angel syndicates, micro-VCs, crowdfunding platforms.
• Series A: You’re scaling with measurable growth metrics and clear unit economics.
  Typical sources: institutional VCs, larger syndicates, strategic investors.

Knowing your stage helps you set realistic expectations about valuation, check size, and investor type.

2. Clarify Your Story and Why It Matters

Investors don’t just invest in companies; they invest in Founders they believe in and stories that make sense.

Your Narrative Should Answer Three Questions

1. Why now? – What market shift or timing advantage makes your startup urgent?
2. Why you? – What unique insight, skillset, or credibility do you bring?
3. Why this? – Why is your solution the most scalable and defensible path forward?

Founders who clearly articulate this story often raise faster, because investors can easily repeat it to others - and that’s how deals get momentum.

3. Build the Core Materials Investors Expect

You don’t need a 100-page business plan. You need three concise, investor-ready assets:

a. Your Pitch Deck

Keep it to 10–12 slides. Cover:

• Problem
• Solution / Product
• Market size
• Traction metrics
• Business model
• Competition / differentiation
• Team
• Financial projections
• The raise: how much, on what terms, and what it funds

b. Your Data Room

Once interest builds, investors will ask for deeper details. Include:

• Financial model or forecast
• Incorporation docs and cap table
• IP assignments and founder agreements
• Customer or revenue data (if applicable)

c. A One-Pager

Perfect for quick intros or syndicate platforms. Summarize the deck on a single clean page with logos, key metrics, and a short mission statement.

4. Choose the Right Fundraising Instrument

In 2025, most early-stage rounds use one of three structures: a SAFE, Convertible Note, or a Priced Round:

1) Instrument: SAFE (Simple Agreement for Future Equity)
Best For: Early-stage raises

Highlights: Fast, low-cost, no valuation negotiation required.

2) Instrument: Convertible Note

Best For: Pre-seed to seed

Highlights: Debt that converts to equity later, often with interest and a maturity date.

3) Instrument: Priced Round (Equity)

Best For: Series A and beyond

Highlights: Sets a formal valuation and issues shares immediately.

If you’re unsure, most founders start with a SAFE. It’s simple, familiar to investors, and accepted on platforms like AngelList and Wefunder.

5. Identify Where Your Investors Actually Are

The biggest mistake founders make is thinking “investors” are one group. They’re not.

Common Investor Types:

• Angel Investors: High-net-worth individuals/Accredited Investors investing their own money.
• Syndicates: Groups led by experienced investors who pool capital from accredited LPs (Velocity Startup operates in this lane).
• Accelerators: Programs that invest small checks in exchange for equity and mentorship.
• Venture Funds: Institutional investors writing larger checks post-traction.
• Crowdfunding Platforms: Great for community-driven or consumer startups (e.g., Wefunder, StartEngine).

How to Find Them

• Search AngelList and Crunchbase for recent deals in your sector.
• Engage in founder-investor communities on LinkedIn and X.
• Attend local pitch events or demo days.
• Warm introductions always outperform cold outreach - but if you must cold email, do it strategically (short, specific, and personal).

6. Know Your Metrics (and Speak the Language)

Even early-stage investors want signals of momentum.

Key Metrics That Matter

• Monthly active users (MAU) or user growth rate
• Revenue or pipeline (if applicable)
• Customer acquisition cost (CAC) and lifetime value (LTV)
• Churn rate, retention, or engagement
• Runway, i.e., how long your cash lasts at your current burn rate

If you don’t have all of these yet, use leading indicators like sign-ups, pilots, or waitlists to demonstrate demand.

7. Master the Investor Conversation

When an investor agrees to a call, your goal isn’t to “sell” - it’s to qualify fit and build trust.

Do’s

• Lead with your traction and momentum.
• Ask what check sizes and verticals they prefer.
• Follow up with clarity (next steps, data room access, timeline).

Don’ts

• Oversell or over-promise - investors prefer realism.
• Hide weaknesses; instead, show you’re aware and managing them.
• Treat all investors the same - tailor your pitch to their angle.

Remember: investors back founders they believe can execute, not just those with big ideas.

8. Set Your Valuation and Target Raise Wisely

Your valuation should balance ambition and credibility. Too high, and you’ll scare off investors; too low, and you’ll give away unnecessary equity.

Simple Framework

• Pre-seed: $2M–$5M post-money range
• Seed: $5M–$15M
• Series A: $20M–$60M+

If you’re using a SAFE, pair it with a valuation cap (the max price at which it converts) that aligns with your traction.

Example: Raising $500K at a $6M cap means investors get roughly 8.3% of equity when it converts.

9. Build Momentum and Close

Once you have a few investors showing interest, momentum becomes your best friend.

How to Keep It Moving

• Announce soft commitments early (e.g., “We’re 40% subscribed”).
• Create urgency with clear timelines.
• Keep a short update thread with weekly progress (investors love progress emails).

Momentum signals that others believe in you - and investors follow momentum as much as metrics.

10. Work With the Right Partners

Raising capital is time-consuming. You can either spend months trying to reach hundreds of investors alone, or partner with experienced syndicates and advisors who can open the right doors.

At Velocity Startup, we help founders:

• Structure their raise (SAFE, note, or equity)
• Refine their materials for investor review
• Connect with active syndicates and LP networks
• Position their story for credibility and speed

Common Mistakes to Avoid

• Raising without a clear valuation or terms
• Sending incomplete or outdated pitch decks
• Ignoring legal structure (Delaware C-Corp is standard)
• Failing to follow up - most checks close after multiple touchpoints
• Waiting too long to start outreach

Avoiding these missteps alone can double your odds of closing a round.

Final Thoughts

The fundraising landscape in 2025 is competitive, but it’s also more open than ever. With syndicates, AI-powered matching tools, and fractional investors on every major platform, founders now have more ways than ever to find capital.

The key is preparation, clarity, and credibility - the three things investors consistently reward.

Navigating the world of venture capital can be daunting, but with the right strategies, startups can position themselves to attract this crucial funding. From identifying potential investors to crafting a compelling pitch, this guide will equip you with the knowledge and tools necessary for securing venture capital. Join us as we dive into the transformative impact of venture capital and empower your entrepreneurial journey.

Once you understand the basics of raising capital, the next step is structuring your round properly. Check out our follow-up article, How to Structure Your Startup Raise: SAFEs, SPVs, and Syndicates, Oh My! for a practical walkthrough of each option.

Ready to raise capital for your startup?
Velocity Startup helps founders prepare investor-ready materials, structure their raise, and connect with active syndicates and accredited investors.

Disclaimer

The information provided in this article is for educational and informational purposes only and does not constitute legal, financial, or investment advice. Velocity Startup is not a registered broker-dealer, investment adviser, or law firm. Nothing herein should be construed as a solicitation or offer to buy or sell securities. Founders and investors should consult their own legal, tax, and financial advisors before making any investment or fundraising decisions.