Navigating a changed landscape: Investor insights for startup success

The past couple of years have seen a significant shift in the fundraising landscape, with startups navigating a new investor mindset amidst increasingly tough economic circumstances. We conducted a recent survey among investors within our network to gather investor insights on what they seek and, importantly, what they do not, to enhance startup success.

Encouragingly a majority are planning to invest more this year than last highlighting the opportunity for startups. In terms of the present climate, investors are seeking well-capitalised startups with a strong track record. Advice for startups in fundraising includes reducing valuations (49%), planning for longer fundraising periods (44%), and raising smaller rounds (38%). 

With investors applying more stringent criteria and economic conditions shifting, it’s crucial for founders to adapt their strategies to secure the capital needed for growth and success. 

We interviewed seasoned investors across our network to get some valuable advice for startups seeking funding and highlight key considerations in the fundraising process.

Fail to prepare, prepare to fail

Christian Teichmann, Managing Director of Burda Principal Investments, emphasised the importance of preparation in fundraising. According to Teichmann, startups should “have a well thought through equity story with matching and supporting numbers and KPIs.” He also advises founders to “raise more capital than you actually think you need while focusing on building an efficient organisation.”

Bryony Marshall, an angel investor committed to supporting diverse founders also supported this perspective. In the interview, she emphasised the importance of maintaining momentum in the fundraising journey. According to Marshall, startups should “have all materials ready” and create a FAQ knowledge base to address investor inquiries efficiently. She emphasised the significance of “strong storytelling and networking within startup communities.”

Leverage angel investors’ expertise for strategic guidance

Cristina Bullon Gomez, an experienced investor, highlighted the symbiotic relationship between investors and startups. She highlighted the crucial role of capital investment in fostering economic growth, stating, “Angel investors represent the first line that can make or break startups.” Gomez is excited about startups to that focus on sustainability and technology. She urges startups to leverage angel investment for “early-stage funding and strategic guidance.”

In terms if red flags she looks out for she said: “I scrutinize the founders’ ability to be agile, handle criticism, and stay composed during challenging times. Additionally, alignment of expectations among founders and a startup’s scalability are crucial factors.”

Focus on founder traits and market validation

Ben Legg is an angel investor passionate about promising founders and innovative ideas. He underscored the significance of strong attributes in a founding team. Legg looks for traits such as “integrity, insight, rigor, emotional intelligence, teamwork, and resilience” in founders. 

He advised startups to “prioritise market validation” and pivot towards revenue, grants, and angel investors in the current investment climate.

Adaptability and persistence

Conor Sharpe, Co-Founder at CircleRock Capital, acknowledged the challenges startups face in the evolving investment climate. Sharpe advises founders to explore various funding options, stating, “Raising capital is harder than ever, so make sure to consider every last funding option to secure funds for your business.” He also emphasized the need for founders to demonstrate “adaptability, resilience, and market validation” to secure funding successfully.

As startups navigate the complexities of fundraising in today’s climate, the insights shared by experienced investors offer invaluable guidance. Focusing on the financial essentials, preparation, and adaptability, founders can increase their chances of securing funding and driving sustainable growth.

By leveraging angel investors’ expertise, demonstrating positive traits and market validation, startups can thrive amidst evolving challenges and emerge as leaders in their respective industries. The message is clear. Embrace the changed landscape and win the hearts and minds of investors.

Looking to fundraise or Invest? Come join us at Angel Investment Network.