Founders should focus on two key areas. First, they need to understand their capital requirements. This means considering what’s necessary to achieve short-term growth goals and ensuring enough runway to reach profitability or secure the next round of funding. The second key consideration is determining whether debt or equity is the appropriate option for their business.

Raising traditional debt can be difficult for early-stage startups. Venture debt is popular but generally becomes more accessible later in a company’s lifecycle. Other debt options include revenue-based financing, government-backed lending schemes, or scale-up focused bank loans.

Typically, companies bootstrap for a while, then raise equity—often from friends and family, high-net-worth individuals, angels, or early-stage funds. Later-stage funding may come from institutional investors (VCs, CVCs, Family Offices, EIS/VCT funds etc) or venture debt providers.

Some founders fear that raising equity means losing control of their company. While taking on equity means introducing a new stakeholder to the business, the extent to which they have control is often minimised to key decisions which would fundamentally change the direction of the business in which an investors consent may be required, it’s however important to understand why investors invest in the first place: to earn a return on their investment, often through an exit or in the context of corporate investors, for strategic synergies as well. Whatever route you choose, it’s essential to be informed and comfortable with the benefits and implications of either approach.

Finally, founders must prepare their investment materials (pitch deck, financial model, data room, etc.) and thoroughly research potential investors. Just as investors perform due diligence on startups, founders should due diligence investors, understanding their stage preferences, typical ticket size, sector focus, geographical preferences, and the value they bring to their portfolio companies.

Founders should also remember that investors may not be as deeply versed in the industry as they are (unless the investor is a sector specialist). Presenting complex or technical ideas in simple, clear language can often make or break a pitch.