Author: Stack'D Money

Fundraising is a critical milestone in your startup journey, but it is also where numerous promising ventures have failed. If you are wondering how many startups fail in India, the numbers are staggering— nearly 90% of startups in India have failed in their first five years. Often, the root cause isn’t the idea, but common fundraising mistakes that derail progress. From poor planning to financial mismanagement, these fundraising mistakes can cost you your dreams. If you are seeking funds for your startup, here are the key startup fundraising mistakes to avoid so that your business can see the light of day in the real-world. 

Why Startup Success Hinges on Avoiding Common Fundraising Mistakes

Fundraising isn’t a stepping stone—it is a strategic test of how well you can lead under pressure with strategy, precision and long-term vision. In fact, one of the most overlooked startup fundraising mistakes is to think that your product or service alone can seal the deal. 

On the other hand, startups that have a solid plan of action earn investor’s trust and close the deal on favorable terms. But if you leave room for fundraising mistakes to happen, you may turn the investors away.

10 Costly Fundraising Mistakes Every Startup Must Avoid — And How to Fix Them

When investors commit capital to your startup, they are not just giving you a cheque — they are buying the future of your company. In return for investment, they receive equity. That’s what makes fundraising a long-term partnership rather than a mere transaction. It is important to focus on your fundraising strategies as more than just a means of raising money.

So, before you send out your pitch deck or take the next investor call, here’s what you need to watch out for.

1. No Clear Fundraising Strategy

Jumping into investor meetings without a clear fundraising plan is a huge red flag. As a founder, you may not want to approach investors without knowing how much funding is needed, how it will be used, or what milestones it should support — leading to confusion and mistrust.

Quick fixes to avoid one of the common startup fundraising mistakes: 

• • • Based on your projected runway, determine the funding amount (12–18 months is good).
    • Divide the use of funds by purpose (e.g., hiring, marketing, product development).
    • Sync up fundraising events with company milestones (e.g., user acquisition, MVP launch).

2. Weak Understanding of Financials (and Financial Mismanagement)

Investors will doubt your capacity to manage cash if you are unclear about your burn rate, cost of acquiring new customers, or profit margins. For serious backers, financial mismanagement frequently results from inaccurate tracking or projection of financial data.

Quick fixes to avoid financial mismanagement:

• • • You must learn and implement key financial metrics and how they impact your runway
    • Keep financial projections realistic and grounded in current performance
    • Use simple dashboards or tools to present clean data to investors

3. Unrealistic Startup Valuation

Instead of focusing on current traction, startups usually overvalue their company based on future potential.  Investors who want sustainable growth over speculative numbers may be put off by exaggerated values that lack revenues or market validation.

Quick fixes to correct your startup valuation mistake:

• • •  Try benchmarking yourself against comparable startups in your area and space.
    •  If necessary, think about bringing in a third-party valuation specialist.
    •  You must be receptive to suggestions on valuation and negotiating.

4. Failing to Target the Right Investor

When it comes to approaching the investors, researching is imperative. Not every investor is ideal for your startup vision, niche, and stage. Simply sending cold emails to investors or pitching to venture capitalists before any revenue is generated frequently results in rejections and leads to a waste of time without concrete outcomes. 

Quick fixes to target the right investor:

• • • Do a thorough research focusing on sectors, ticket size and geography
    • List those who have provided funding for comparable businesses or stages.
    • Adapt your pitch to suit their areas of interest and portfolios 

5. Incomplete or Generic Pitch Deck 

A mediocre or cookie-cutter pitch deck can seriously hurt your chances of bagging any investment. Investors won’t move forward if your narrative is unclear, your figures are missing, or your slides appear hurried.

Quick fixes for better pitch decks:

• • • Make sure the problem, solution, market size, traction, team, and ask are all covered in your deck.
    • Add eye-catching statistics and images (charts, growth graphs, client quotes, etc.).
    • Steer clear of jargon and keep your writing clear, concise, and narrative-driven.

6. Unprepared for Due Diligence

Rushing when due diligence starts is one of the quickest ways to lose investor interest. Financial mismanagement or misalignment, out-of-date cap tables, or missing documentation all indicate disarray and significant risk.

Quick fixes to be prepared:

• • • Organize key documents in a data room (financials, legal, IP, contracts)
    • Ensure that your cap table is updated and clean
    • Conduct multiple mock due diligence rounds internally to identify gaps

7. Lack of Proof of Concept or Traction 

Investors are looking for proof of demand. Without user interaction, a functional MVP, or early income, fundraising might turn your pitch into conjecture rather than an opportunity.

Quick fixes to overcome this fundraising mistake:

• • • Start gathering user feedback after releasing a basic version of your product.
    • Discuss case studies, waitlist expansion, or pilot results.
    • Emphasize early user reviews or potential collaborations.

8. Rejecting Feedback and Ignoring a Backup Plan

Reluctance to listen, adjust, or think about the worst-case situation is a hallmark of bad leadership and short-sightedness. A lot of investors want founders to be coachable and to have backup plans in case things don’t work out. During due diligence, ignoring either could raise severe red flags.

Quick fixes to navigate through this weak fundraising strategy:

• • • Even if you don’t act on investor comments right away, acknowledge it.
    • Be receptive to many viewpoints and eager to make adjustments.
    • Create and distribute a practical backup plan that takes risks or possible turns into account.
    • Present investor feedback as cooperative rather than crucial, and then make deliberate changes afterwards.

9. Fundraising at the Wrong Time

One of the best fundraising strategies is not to ignore the timing—it is everything. It is important to note that fundraising too early (before validation) or too late (in a cash crunch) can both backfire. Raising during internal transitions, market downturns, or strategic pivots can also weaken your position.

Quick fixes to make the most of the timing:

• • • Start building investor relationships at least 3–6 months before your raise
    • Avoid raising when your product or team is in flux
    • Time your raise when you have fresh traction or clear milestones

10. Failing to Communicate and Follow Up

For the simple reason that founders fail to keep up the momentum, many intriguing pitches fall flat.  Uncertain communication, a lack of updates, or delayed responses can all be signs of apathy or disarray.  Investors demand proactive, open communication in a high-stakes setting like startup financing.  This fundraising mistake can harm your reputation among investors in addition to stalling one venture.

Quick fixes to ensure you are proactive and in sync with your investors:

• • • Always send timely follow-ups after meetings or pitch sessions
    • Do share regular, brief updates on key milestones and progress
    • Clarify next steps and timelines in every interaction

Fundraising Mistakes Aren’t Inevitable. You Need Smarter Fundraising Strategies Instead

Preparation, timing, and self-awareness are key to avoiding typical fundraising mistakes. You can approach your next funding round with clarity and control by taking note of other people’s mistakes. Building relationships, trust, and long-term value are more important goals of fundraising than merely making money.

At Stack’D, we help startups sidestep common fundraising mistakes with expert guidance, tailored strategies, and investor-ready support. From refining your pitch to building the right investor relationships, we make sure you’re set up to raise smart — not just raise fast.

You have a brilliant startup idea, a convincing pitch deck, a solid business plan, and the dream to take it to the next level. But none of it matters if you can’t get them in front of the right audience, i.e., investors. 

The average venture capital firms receive more than 1,000 proposals per year. While cold emails and DMs are a way to go, more often than not, they get lost in a crowded inbox. So, what really works in the startup world, and what is the best way to find investors and secure meetings with them? Warm introductions.

Importance Of Warm Introductions With Investors 

Without knowing about you or your company, no investor or venture capitalist (VC) would be willing to invest in your startup. It takes investors one bad referral to erode the goodwill and social capital they have accrued over the years. So, they’d be skeptical to take a chance on an unknown commodity. That’s precisely why warm introductions are so critical – they build credibility, boost trust, and are the faint difference between scoring a meeting and getting lost in a flurry of emails.

Once you land a warm introduction with an angel investor or VC, it can accelerate the fundraising process, helping your startup scale.

How To Secure Warm Introductions With Investors

Wondering how to secure warm introductions with investors, especially if you’re just starting out? Here’s a step-by-step guide:

Step 1: Navigate the target market

Before you start your funding journey, familiarize yourself with the market landscape. These are some key questions that you need to ask:

• • • Is the market bullish or bearish?
    • What is the market sentiment like?
    • Who are the top investment players?
    • What kind of funding stage is your company at?
    • VCs, angel investors, accelerators, or incubators – which kind of investors are active? 

Step 2: Audit your network 

There’s a reason it’s called a warm introduction – because your real-life connections ‘warm up’ the investors, softening the way so you can start off on the right foot. 

The best person to ask for an introduction is someone from your professional network – mentors, former colleagues, alumni, advisors, previous investors, or even friends. Study their professional backgrounds, learn about their interests, and check if their investment criteria align with your business specifics. Do your homework thoroughly before reaching out to any investor. 

Step 3: Leverage LinkedIn

First, create a list of potential investors who are aligned with your startup’s industry. Once you have clarity on the kind of investors you want on board, get on LinkedIn, a platform made for forging connections, and use its search bar to scout for investors. 

Explore the list of mutual connections you share with an investor, prioritizing those who have a trusted relationship with them.  Identify a connection with the strongest link to the investor and a history of successful collaboration. 

Craft a personalized message to the chosen mutual connection, succinctly explaining your startup and why you believe the investor would be a good fit. This is sales 101. Actively engage with your connections to make a lasting impression. Like, comment, or share their posts consistently to shape genuine interactions with them.

Subtly ask them to facilitate a warm introduction with the investor and give them a good enough reason to do so. If the referrer agrees, provide them with a brief overview of your startup and help them with a pitch deck and the necessary documents required to make a strong case for you.

A warm introduction requires double opt-in, i.e., the connector ensures to get approval from both sides before proceeding.

Once you’re in touch with the investor, express gratitude to the mutual connection for their assistance and keep them in the loop throughout the process. At this stage, keep your executive summary and financial model handy to strengthen your investor outreach.

Step 4: Put yourself out there

Relying only on one channel will take you forever to secure a warm introduction. If you don’t have esteemed VCs and investors on your list, you can always develop your network from scratch. 

Diversification is key, not only in investing but also with respect to investor outreach. Attend industry events, conferences, and seminars to meet potential investors or connect with entrepreneurs. Be an active and participating member of the entrepreneurial ecosystem to form new connections and meet investors. Here’s your chance to bring value to the community, share ideas, and get insights on boosting your business.

You can also enlist on online funding platforms or reach out to accelerators and incubators who may show interest in your startup.

Step 5: Draft the perfect introductory email

You know your startup the best. So, offer a forwardable email to your introducer (written from your perspective, not your referrer’s), which they can share ahead in one click. Amidst an ocean of messages to the VC, how does your email stand out? Here’s an email structure you can follow:

• • Start your email by thanking your introducer.
    • Write a crisp blurb about your company, your product offerings, and target customers.
  • Mention your KPIs and traction received.
  • Share your funding round and expectations.
  • Elaborate on why they would be a good fit as an investor.
  • Schedule a meeting based on their convenience and end your email with a powerful call-to-action.

In case you do not hear back from the investor, don’t hesitate to follow up, but don’t spam their inbox. Each follow-up is a chance to update them about your startup’s growth. Share valuable information that creates a sense of urgency and FOMO (fear of missing out). Share your pitch deck only if the investor seems hooked and asks for additional information.

Instead of just focusing on conversion as the end goal, get into a meaningful conversation with the investors. Don’t send the same email template to all your investors. Customize each email according to the investor’s profile and their background.

Way Ahead

Let’s assume you’ve been introduced to investors interested in your startup. So, what’s next? Ensure you are prepared from the get-go, way before securing these warm introductions. 

• • • Know what kind of investor you’re looking for. Most investors have a sweet spot in which they prefer investing, depending on a specific type of industry and their expertise, the stage of development, a particular geographic region for practical feasibility, and the amount of money to be invested. So, understand where you fall in that mix to attract the right kind of investors. 
    • Be prepared. You never know when you may procure the warm introduction you’re vying for! So, if you see that window of opportunity to meet an investor, you must give it your all because such meetings are hard to come by. Keep your pitch deck ready because you don’t want to let yourself or your referrer down.
    • Engage with your connections’ posts and leave comments to foster stronger relations. Staying active on LinkedIn makes your presence felt and keeps you on top of everyone’s minds.
    • Once you connect with an investor, update them monthly with your startup’s key metrics. Provide a detailed quarterly financial progress report, and highlight your YoY growth in your annual futuristic report.

Investor outreach is a long-drawn-out process. So, if you want to go from 0 to 1 or 100 quality intros, patience is key. Many perceive warm introductions as unequal because not everyone might have access to connections. However, an introduction to an investor does not guarantee a check.

Rome was not built in a day, and neither will your network. If you believe in your startup’s growth and work hard to build meaningful relationships, such introductions can always be earned.

Every startup needs fuel to take off, and that fuel is funding. But in the early stages of building a business, choosing where to get that funding from can feel like standing at a fork in the road. Two of the most common paths? Angel investors and venture capitalists (VCs). While both bring in capital, they have different expectations, structures, and timelines.

If you’ve ever wondered about the difference between venture capital and angel investors or struggled with the question of angel investors vs. venture capitalists, this guide breaks it down for you.

Who Are Angel Investors?

Angel investors for startups are high-net-worth individuals who invest their own money into businesses, usually at a very early stage. Think pre-seed or seed stage, when you might have little more than a prototype and a strong vision.

Angel investments are typically smaller than VC rounds, but angels are more flexible and often take bigger risks in the early days.

Characteristics of angel investors for startups:

• • Early-stage involvement – Often the first external funding after friends and family.
  • Smaller cheques – Usually between £10,000 to £500,000.
  • Quick decisions – Less bureaucracy than VCs.
  • Hands-on support – Many angels offer mentorship, connections, and business advice.
  • More personal relationship – You may pitch directly to the investor, not a board.

Who Are Venture Capitalists?

Venture capitalists (VCs) are professional investors or investment firms that fund high-growth startups in exchange for equity. They usually come in at later stages, like Series A, B, or C rounds, when the business model is more refined and there’s a proven market.

Key features of venture capital funding:

• Large investment amounts – Typically in the millions.
• Due diligence – Extensive research and analysis before investing.
• Equity stake – VCs get shares and often a seat on the board.
• Milestone-based funding – Further capital depends on hitting growth goals.
• Professional management – VCs often demand structured operations and governance.

If you’re raising seed funding or scaling aggressively, venture capital may seem like a logical step.

Pre-Seed vs Angel: Are They the Same?

While pre-seed refers to the stage of your startup’s lifecycle, angel refers to the type of investor. Most angel investors for startups invest during the pre-seed or seed stage, when your product might still be in development and you’re validating your idea in the market.

Angel Investors vs. Venture Capitalists: Key Differences

Criteria	Angel Investor	Venture Capitalist
Funding Stage	Pre-seed / Seed	Series A and beyond
Source of Funds	Personal wealth	Pooled funds from firms/institutions
Investment Size	₹10 lakhs to ₹5 crores	₹10 crore+
Decision-Making	Individual, fast	Committee-based, slower
Involvement	Mentorship, network access	Strategic oversight, board participation
Risk Appetite	Higher risk, high belief in vision	Lower risk, based on data and growth
Ownership Stakes	Lower than VCs, but more flexible	Larger equity stake
Typical Exit Expectation	5-10 years	3-7 years

Disadvantages of Angel Investors for Startups

Angel investors come with their own challenges:

• Limited funds – You may need multiple angels to raise enough capital.
• Less structure – Not all angels are experienced; some may lack a strategic approach.
• Personal dynamics – A poor relationship with an angel can become complicated.
• Inconsistent support – Not all angels will have the time or resources to offer help.

Disadvantages of Venture Capital for Startups

While VCs can turbocharge growth, they’re not always ideal. Here’s why:

• Loss of control – VCs often want a say in company decisions.
• High expectations – Pressure to scale fast and hit big milestones.
• Dilution – Larger funding rounds mean giving up more equity.
• Exit pressure – VCs expect a profitable exit within a few years.
• Longer fundraising process – It can take months to close a VC round.

Angel Investors vs. Venture Capitalists: Which One Is Right for You?

There’s no one-size-fits-all answer. The choice between angel investors and venture capitalists depends on your startup’s stage, goals, and risk appetite.

Go with an Angel Investor if:

• • You’re at the idea or MVP stage.
  • You need quick funding to get your startup off the ground.
  • You’re looking for a mentor or advisor.
  • You prefer a more personal relationship with your investor.

Go with a Venture Capitalist if:

• • You’re scaling up and need large capital.
  • You have traction and a proven business model.
  • You’re aiming for rapid growth and a large market share.
  • You’re ready to give up some control for bigger support.

Final Thoughts

Understanding the difference between venture capitalists and angel investors for startups can help you make an informed funding decision. Both have their place in a startup’s journey. Start small, build trust with early-stage angels, and when the time’s right, approach VCs to take your business to the next level.

If you’re navigating between angel investors vs. venture capitalists options, what matters most is finding partners who believe in your vision and can help turn it into reality.

India is home to one of the biggest startup ecosystems in the world, with more than 1.5 lakh startups recognised by DPIIT. As these startups are bursting with potential, the most common question asked during a consultation is – How to get my startup valuation right? It is much easier for later-stage startups, thanks to historical company performance data. However, for younger companies, startup valuation methods are a little different.

How do you Calculate a Company Valuation?

A company’s valuation is its fair market value or intrinsic value. This means the value of a startup can be assessed based on market factors or the actual value of its assets. In either case, valuations depend on certain dynamic factors such as:

1. 1. 1. Time: The value of your business can change daily depending on working capital, cash flows and earnings. These factors are always in a state of flux, and hence, so is the valuation of a startup.
      2. Market forces: General politico-economic conditions influence the rate of return for your business, making the valuation subjective.
      3. Liquidity: Increased liquidity in the company increases its value. This is because the stockholders use liquid assets as security in case of bankruptcy.

In addition to these main factors, future cash flows and underlying assets also influence the valuation process.

7 Startup Valuation Methods Every Indian Founder Should Know

Whether you’re bootstrapping in Bengaluru or raising your first round in Hyderabad, how company valuation is calculated is one of the most important things to get right before fundraising. Choosing the right valuation method depends on where you are in your startup journey: pre-revenue, early traction, or scaling with cash flows. Here are seven valuation techniques to help you determine your startup’s worth and walk into investor meetings prepared:

1. 1. Berkus Method

Ideal for: Pre-revenue startups

This is one of the most straightforward startup valuation methods if your startup is still at the idea or MVP stage with no revenue. The Berkus Method assigns rupee values to five key success factors: sound idea, prototype, quality team, strategic relationships, and product rollout or sales.

For example, if each factor is assigned ₹50 lakhs, your startup may be valued at ₹2.5 crores even before revenue. It’s based on the assumption that your startup can hit ₹160 crore (around $20M) in revenue in 5 years.

Use this method if you’re seeking an angel investment with a vision-heavy pitch.

 

2. Risk Factor Summation Method

Ideal for: Founders with an idea and a solid plan

This method starts with a base valuation and adjusts it up or down based on 12 risk categories like management, legislation, technology, competition, etc.

Each risk is rated as +2 (very low risk), 0 (average), or -2 (very high risk). The overall score tweaks the base value to reflect your startup’s circumstances. It’s a slightly more detailed method than Berkus and works well for early-stage Indian startups building in regulated or high-risk sectors like fintech, agritech, or healthtech.

 

1. 3. Scorecard Valuation Method

Ideal for: Comparing yourself to other Indian startups

Think of this method as a startup valuation calculator that benchmarks you against similar startups in the Indian ecosystem. It takes a known average pre-money valuation and adjusts it based on market size, team, traction, product, and more factors.

For instance, if similar startups in your sector are valued at ₹6 crore, but you have a stronger team and early user traction, the method adjusts your valuation upward accordingly. Angel investors commonly use this method, especially when there’s enough market precedent.

 

1. 4. Comparable Transaction Method

Ideal for: Startups with some progress to show

How do you calculate a company valuation when there’s already some buzz in your industry? This method compares your startup with companies that recently acquired or raised funding in the same sector.

Let’s say a B2B SaaS startup offering similar features was acquired at 10X revenue, and you’re projecting ₹2 crore in ARR, your valuation of startup companies could land near ₹20 crore. This method relies on access to market data. Use it if your segment has seen exits or recent raises.

 

1. 5. First Chicago Method

Ideal for: Post-revenue startups in India’s growth markets

This technique combines three potential outcomes: best-case, base-case, and worst-case scenarios. Each outcome is assigned a probability and valuation, and the weighted average gives a balanced view of your startup’s worth.

This valuation method works well for scaling startups with unpredictable revenue patterns like D2C brands or mobility startups. It brings realism into the valuation process, which investors in India’s competitive capital landscape often appreciate.

 

1. 6. Discounted Cash Flow (DCF) Method

Ideal for: Revenue-generating startups with long-term visibility

The DCF method estimates your company’s value on the basis of projected cash flows, discounted to present value using a risk-adjusted rate. While not always ideal for high-growth tech startups due to cash burn and reinvestment, it’s valuable for SaaS or B2B startups with predictable income.

This method is data-heavy and best used when you have financial projections for 5+ years and a clear path to profitability.

 

1. 7. Venture Capital Method

Ideal for: Startups preparing for institutional rounds

The Venture Capital method starts with the investor’s desired exit value and return multiple and works backwards to calculate today’s valuation. For example, if an investor wants to exit at ₹100 crore in 5 years with a 10x return, your startup’s pre-money valuation would be pegged at ₹10 crore.

It’s practical, quick, and often used by Indian VCs looking at growth potential rather than current earnings.

Calculate Smarter: Opt for a Consultation

When you’re an early-stage startup founder, valuation methods can feel overwhelming and often confusing. To get a fair idea, you can opt for a consultation for choosing the right valuation method and understanding the rationale behind pitching it. A prefunding consultancy can guide you through this process, offering market insights, hands-on expertise and near-accurate calculations.

Valuation is not Guesswork. It is a Strategy.

The Indian startup ecosystem is booming, but so is investor scrutiny. Whether you’re chasing seed capital or a Series A round, understanding these startup valuation methods can help you stay realistic, confident, and better prepared at the negotiation table.

Remember: Investors don’t just invest in ideas; they invest in confidence backed by logic. And nothing says “I know my business” like choosing the proper valuation techniques. At Stack’D, we help you select the best startup valuation methods, backed by experience and expertise, for the best results.

First impressions are often the last impression. Nowhere is that truer than while pitching your business to investors. Presenting a pitch deck is often your first and only chance at convincing potential investors to fund your business. 

No wonder the process of building a pitch deck for startups and pitching it to investors can be a stressful experience. But it doesn’t have to be this way. We’re here to help you make your life easier. 

Here’s a complete guide to building a pitch deck for startups. Let’s begin with the basics.

What is a Pitch Deck for Investors? 

Pitch decks provide a snapshot of your startup’s business model for potential investors. It helps build an understanding of your products for your stakeholders. Which, in turn, helps them decide whether or not to invest in your business. To be effective, your pitch deck needs to include:​

• • • Problem Statement: The issue your startup addresses.​
    • Solution: How your product or service effectively solves the problem.​
    • Market Opportunity: The size and potential of your target market.​
    • Business Model: How your startup will make money.​
    • Competitive Analysis: Your positioning relative to competitors.​
    • Financial Projections: Summarised forecasts and funding requirements.​

Knowing what you need in a pitch deck is just half the battle won. Understanding how to phrase your pitch to make it more attractive makes the real difference. Here are 7 tips you should keep in mind while creating your pitch deck. 

1. Develop a Strong Elevator Pitch 

Far too many entrepreneurs fall into the trap of providing every piece of information, thinking it would lead to maximum clarity. But that can be a slippery slope because how much information is too much information? 

Instead, you should start with an elevator pitch that includes the following: problem, approach, solution and action – within a line or two. From here, you can build your pitch deck to support this narrative as strongly as possible. 

2. Leverage Emotional Storytelling 

It’s time to move beyond simplistic storytelling, where you solve a customer’s problem and then you and your customers live happily ever after. Brand storytelling has moved beyond the problem/solution approach. 

Today, brand loyalty is developed more through emotional storytelling that consistently remains at the top of your potential customers’ minds. That’s why your brand’s presentation for investors should focus on building an authentic image that your audience resonates with. 

3. Include a Clear Roadmap 

Your vision, mission, and plan for your startup will be the roadmap that your investors will refer to when looking at the future potential of your business. So, you cannot keep these as vague guidelines or moral principles. 

It means establishing your business direction, listing out your priorities, and detailing out the plans for achieving your business goals. For example, if you want to increase your brand’s reach, don’t just say you will use social media; list which platforms you will use and how you will use them to increase your reach.  

4. Define What ‘Success’ Means

What matters more to your investors? The journey or the destination. Well both. They are not only interested in the business roadmap but also tin he end goals you set for your business. So it might be best not to put templatised numbers that are not backed by data. 

Identify the key metrics that will matter to your business. These metrics might shift and change depending on what stage your business is at. You should also have your projected numbers for these metrics backed by reliable data. 

5. Size up Your Market and Audience

The goal is not to impress investors with a large market size with huge numbers. It’s more important to provide accurate numbers that can be backed up by proof. 

You need to have a clearly defined Total Addressable Market (TAM), Serviceable Available Market (SAM) and Serviceable Obtainable Market (SOM). You should also include how your product will appeal to these markets. 

6. Identify Your Competition Correctly

Investors are keenly interested in knowing which other businesses you will be going up against. Infact, for pre-seed startups, investors can spend almost 55 seconds just taking in the competitor’s slide. So you need to ensure your research makes it worthwhile for them. 

Your pitch deck should include the standard 4-quadrant SWOT analysis because it’s a tried and tested framework. However, you can also include a section highlighting how your product or service will help you form a niche in the existing or new markets. 

7. Show a Demo If Needed

Showing is always better than just telling. The best way to convince investors is by making them believe your product or service really solves challenges in the market. 

This could be a hands-on experience with the product. Alternatively, you can even show focus groups giving honest feedback about your product after testing it. 

What to Keep in Mind While Creating a Pitch Deck?

Remember, practice is the key to delivering a presentation for investors. Start early and keep fine-tuning your pitch deck with every rendition to ensure you put your best foot forward. At Stack’D, we will help you reach out to the right VCS, angels & accelerators that can take your business to the next level. 

You’ve planted the seed of a startup and mapped out your product development plan. But it all depends on whether you have the funds to launch it from the ground up and bring it to life. Therefore, nearly all companies need to undergo several startup funding rounds, which require external funding or venture capitalists to cut them a cheque. 

The Different Startup Funding Rounds

Each startup funding round, from pre-seed to IPO, is a milestone in the startup’s growth cycle. Let’s see how a spark of an idea can give birth to a thriving startup.

Bootstrapped Stage

For a bootstrapped company, the very first startup funding round depends on the founders and their own resources (such as personal debt or savings accounts). However, with the advent of cloud, no-code, and online distribution, many startups try to push the initial few funding rounds to retain more equity. In fact, these factors add value to the startup’s growth to the extent that founders willingly extend their bootstrapping stage, hoping to chance upon a major payday offering when they open their companies to external investors. 

Therefore, startup funding rounds are an integral part of their growth journey.

Pre-seeding Stage

But in reality, not every company can bootstrap their way to success. More often than not, budding startups need external or angel investors’ support to scale and grow, bringing us to the pre-seed funding stage. With an experienced founding team at the helm, startups at this stage are still building their minimum viable product (MVP), garnering a small user base, and fine-tuning their business idea. A successful previous entrepreneurial venture only makes it easier to raise pre-seed funding. However, to bet a significant amount of money on a nascent idea can be tricky. 

• • • Pre-seed investors – This is the earliest stage of a startup seeking external funding from the people around them, that is, their families and friends or through crowdfunding, incubators, or accelerators. Having strategic investors on the pre-seed cap table can set a precedent for the upcoming seeding rounds.

• • • Pre-seed valuation – A billion-dollar idea or not, pre-seed startups get modest small checks in this round of valuation, ranging from $10k to $1 million. These funds are often used to set up an office, market research and testing, or to prepare for the product launch.

Valuing a company this early can be challenging. Hence, founders swear by the SAFE notes – Simple Agreement for Future Equity. This financial instrument allows investors to provide capital so the startup can grow faster in exchange for future equity in the company.

What is a seed round?

We are entering the startup funding round where the seed of your idea can germinate into a tree with capital support from investors. Once you have entered this official fundraising stage, your MVP should be a proven product-market fit (PMF). Factors that determine your startup’s success include its monthly revenue growth, traction, sign-ups, burn rate, meaningful product usage and whether it has any actual demand in the market. 

• • • Seed investors – Angel investors and early-stage venture capital firms are more likely to invest in this round, with a higher likelihood of securing the first board seat. This translates into more influence and voting rights in paramount decisions. It also gives them pro rata rights to invest in the following funding rounds.

• • • Seed valuation – Startups looking for seed funding have an estimated business value of $3 million to $6 million.  

The seed stage is a crucial landmark that determines your startup’s potential.

1. Series A Funding

Congratulations! You’ve made it to the big leagues. Now is your time to scale up, but with the help of a significant investment, to catapult your startup to success. Series A funding scrutinizes the startup’s growth, track record, gross margins, and YOY revenue flow.

• • • Series A investors – To capitalize on this momentum, seasoned venture capitalists are the top investors in this Series. So, when you are in the pitching process, lay out a quantifiable growth plan, and explain how their investments will help your startup reach its goals. 

• • • Series A valuation – Valuations under this Series type vary between $10 million and $30 million.

This funding round aims to scale the business. It also helps purchase equipment and inventory. Additionally, it supports expansion into new markets, building a core team, and working towards long-term goals.

2. Series B Funding

Companies seeking Series B funding indicate that they have established a strong market presence. This part of the entrepreneurial journey includes having stable revenue, a solid customer base, and hitting all your KPIs. It also involves surviving investor pressure. If you’ve achieved all this, it means you’ve done everything right. Series B funding type would enable startups to expand their operations, increase their market share, and tap into new markets.

• • • Series B investors – This late-stage funding comes from hedge funds, investment banks, venture capital funds, private equity firms, or investors who initially offered Series A funding.

• • • Series B valuation – The valuation for Series B startups varies from $30 to $50 million.

As a Series B funding, your startup now has more negotiating power because it has proven to be successful. Now, the company is at the cusp of expanding internationally.

3. Series C Funding

Proceeding to Series C funding is a reflection of your company as a proven and successful business model. You are a key player in your industry with multiple revenue streams. You also have a diverse revenue model, a dominant market presence, and a significant market share.

• • • Series C investors – Hedge funds, investment banks, late-stage venture capitalists, and private equity firms, attracted by the company’s maturity and growth prospects, are more likely to invest.

• • • Series C valuation – Series C funding amount is generally between $50 and $100 million or more.

After Series C, your company generates enough revenue to sustain its own growth without depending on external funding. This funding type is the final step in terms of venture capitalist financing. You can go on to make strategic acquisitions to expand your product portfolio. This also helps prepare for a potential exit through an initial public offering (IPO).

4. Series D Funding

Series D funding is raised if the company is too ambitious and wants to hit it out of the park. Alternatively, it may be raised because the company was unable to meet its goals and raise adequate funds in Series C. Less than 5% of startups raise a Series D round, and even fewer move to Series E, F, or G. 

• • • Series D investors – Investment bankers or private equity firms are primarily involved. They provide capital and expertise to prepare for IPOs, acquisitions or mergers.

• • • Series D valuation – The valuation ranges from $100 million to billions.

Not all startup funding rounds extend till Series D, as some prefer to exit through IPOs or an acquisition.

Initial Public Offering (IPO)

IPOs are the ultimate milestone for any startup. An IPO is when a private company lists its shares on a public stock exchange platform, allowing public investors to buy and own a piece of the company. Marking a transition from a high-growth startup to a publicly traded enterprise, this is a key moment. It’s the moment for founders to cash out.

By going public, companies can raise substantial capital from a broad base of investors. This also provides liquidity for the founders and investors.

Final Thoughts On Startup Funding Rounds 

Before approaching potential investors, you have to bring your A game. This means having a strong business plan that outlines your goals and products or services. It also requires a robust financial model. Additionally, you need a meticulous pitch presentation. This presentation should communicate your unique selling proposition, fundraising requirements, and financial objectives.

Startup funding rounds are not just a game of numbers; they speak volumes about a company’s vision and the determination to make it big. So, whether you are just starting out as a founder or an aspiring investor, your journey from pre-seed to IPO isn’t just about money – it’s about momentum. 

Every great startup begins with an idea. But what transforms an idea into a thriving business? A well-crafted business plan. Imagine walking into a room full of investors. You have just minutes to convince them that your startup isn’t just another fleeting vision but a scalable and profitable venture. That’s where your business plan becomes your most powerful tool.

Why a Business Plan is So Important for Startup Investors

Investors aren’t just looking for groundbreaking ideas; they’re searching for solid execution strategies. A business plan proves that you’ve done your homework and have a roadmap to success. Here’s why it’s crucial:

• • • Clarity and Direction – It shows investors that you understand your market and know where you’re headed.
    • Market Viability – It demonstrates a real demand for your product or service.
    • Financial Feasibility – It reassures investors that your business can generate sustainable revenue.
    • Risk Management – It anticipates challenges and outlines strategies to overcome them.

How to Make a Business Model for a Startup

A business model defines how your company creates, delivers, and captures value. Here’s how to structure yours:

• • • Identify your value proposition – What unique problem does your startup solve?
    • Define your target market – Who are your ideal customers? What pain points do you address?
    • Outline revenue streams – How will you make money? Subscriptions, one-time sales, or freemium models?
    • Understand cost structure – What are your fixed and variable costs?
    • Establish key partnerships – Are there strategic alliances that can accelerate growth?

Crafting a Business Plan That Investors Will Love

A well-structured business plan isn’t just a formality, it’s a powerful document that can make or break your fundraising efforts. Here’s what you need to include:

1. Executive Summary

First impressions matter. This section should be a compelling snapshot of your startup, covering:

• • • Your business idea

• • • Market opportunity

• • • Revenue model

• • • Funding requirements

• • • Competitive advantage

Think of it as your elevator pitch in written form. Make it clear, concise, and compelling enough to grab an investor’s attention.

2. Company Description

Tell your startup’s story:

• • • Mission and Vision Statements – What drives your business?
    • Legal Structure and Ownership Details – Who owns what?
    • Business Milestones and Goals – Show past wins and future targets.
    • Unique Selling Proposition (USP) – What makes your startup different from others in the market?

3. Market Research and Competitive Analysis

Investors need proof that there’s demand for your product:

• • • Industry Trends and Market Size – Show data-backed insights.
    • Customer Demographics and Buying Behaviour – Define your ideal audience.
    • Competitor Analysis – Highlight what sets you apart.
    • Market Gaps and Opportunities – Identify areas where competitors are lacking and where your startup can excel.

4. Business Model and Revenue Streams

Explain how your business will sustain itself:

• • • Pricing Strategy – How does it compare to competitors?
    • Monetisation Plans – Recurring revenue or one-time purchases?
    • Sales and Distribution Channels – Online, retail, or partnerships?
    • Customer Acquisition Strategy – How will you attract new customers and retain them?

5. Marketing and Growth Strategy

A strong marketing plan reassures investors about customer acquisition:

• • • Branding and Positioning Strategies – How will you stand out?
    • Digital Marketing Plans – Social media, SEO, and paid ads.
    • Public Relations (PR) Strategy – Media outreach and partnerships.
    • Customer Retention Tactics – Loyalty programs, personalised engagement, and customer support.

6. Operations and Team

Investors bet on people as much as ideas. Showcase:

• • • Your Leadership Team – Who’s driving the business?
    • Key Hires and Organizational Structure – Future hiring plans.
    • Operational Workflow and Technology Stack – Efficiency measures.
    • Advisors and Mentors – If applicable, mention industry experts who are guiding your startup.

7. Financial Projections and Funding Request

Numbers matter. Provide:

• • • Revenue Forecasts for 3-5 Years – Based on market trends.
    • Profit and Loss, Cash Flow, and Balance Sheet Projections – Ensure transparency.
    • Break-even Analysis – When will you become profitable?
    • Funding Requirements and Allocation – How will you use investor funds?
    • Return on Investment (ROI) Projections – What potential returns can investors expect?

8. Risk Assessment and Mitigation Strategies

Every business faces risks. Show investors that you’re prepared:

• • • Market Risks – Competition, changing trends, and economic downturns.
    • Operational Risks – Supply chain disruptions, talent shortages, and technical failures.
    • Financial Risks – Cash flow challenges, unexpected expenses, and pricing fluctuations.
    • Legal and Regulatory Risks – Compliance issues and intellectual property concerns.
    • Contingency Plans – How will you pivot if challenges arise?

9. Exit Strategy

Investors want to know how they will get a return on their investment. Outline potential exit strategies such as:

• • • Acquisition by a Larger Company – A common exit plan.
    • Initial Public Offering (IPO) – If your startup has rapid growth potential.
    • Merger with a Competitor – Joining forces for a lucrative exit.
    • Buyout by Founders or Existing Shareholders – Selling shares back to stakeholders.
    • Dividend Strategy – If applicable, explain how you plan to generate and distribute profits over time.

Final Thoughts

A compelling business plan is not about impressing investors but more about creating a roadmap for success. By following this structured approach, you’re not only preparing to secure funding but also building a business with a solid foundation.

Investors need confidence in your vision, market understanding, financial acumen, and ability to execute. Your business plan is your chance to prove that your startup is more than just another idea – it’s a viable and scalable venture built for success.

Start crafting your investor-ready business plan today!

 

The most important stakeholders in any early-stage business are VCs, angel investors, or sharks; call them what you want. Every entrepreneur wants investors but is unsure how to attract them. If that’s you as well, it’s not your fault. The startup funding process is often shrouded in secrecy.

That’s why we’re bringing you the definitive startup investment checklist:

1. Develop a Solid Business Plan

Your business plan serves as the roadmap for your startup and is pivotal in attracting investors. It should encompass:​

• • Executive Summary: A concise overview of your business that highlights its mission, vision, and objectives.
  • Market Analysis: Detailed research on your target market, including size, growth potential, and competitive landscape.​
  • Revenue Model: Clear articulation of how your startup intends to generate revenue.​
  • Financial Projections: Realistic forecasts for the next 3-5 years backed by income statements, balance sheets, and cash flow statements.​

A well-structured business plan not only guides your internal strategy but it also demonstrates to investors that you have a clear pathway to profitability.

2. Define Your Unique Value Proposition (UVP)

It is crucial to spell out what sets your startup apart. Your UVP should answer:​

• • What problem does your product or service solve?​
  • How does it differ from existing solutions in the market?​
  • What specific benefits do customers gain from your offering?​

A compelling UVP captures investor interest by showcasing the distinct value your startup brings to the market.

3. Ensure Financial Health and Transparency

Investors find it easier to trust startups with sound financial practices. Ensure:​

• Accurate Financial Records: Maintain organized and up-to-date financial statements.​
• Financial Audits: Conduct internal audits to verify financial accuracy.​
• Debt Management: Address existing debts and outline strategies for liability management.​

Transparency in your financial dealings is a basic funding requirement as it builds investor trust and confidence in your management capabilities.

4. Demonstrate Traction and Scalability

Investors are interested in startups with proven traction and growth potential. Highlight:​

• • Customer Acquisition: Metrics on user growth and customer retention rates.​
  • Revenue Growth: Evidence of increasing sales or recurring revenue streams.​
  • Scalability: Plans for expanding operations without significant increases in costs.​

Demonstrating traction and a scalable business model indicates to investors that your startup is poised for sustainable growth.

5. Assemble a Strong Leadership Team

The competence of your team significantly influences investor decisions. Ensure your team:​

• • Diverse Skill Sets: Combines technical expertise with business acumen.​
  • Industry Experience: Possesses relevant experience that adds value to your startup.​
  • Cohesive Vision: Shares a unified commitment to the startup’s goals and culture.​

A strong, cohesive team reassures investors of your startup’s capability to execute its business plan effectively.

6. Prepare Detailed Financial Projections

Providing realistic financial forecasts is essential. Prepare:​

• • Income Statements: Projected revenues and expenses over the next few years.​
  • Cash Flow Statements: Anticipated cash inflows and outflows to ensure liquidity.​
  • Balance Sheets: Estimates of assets, liabilities, and equity positions.​

Detailed financial projections demonstrate to investors that you have a clear understanding of your startup’s financial trajectory.

7. Conduct a Thorough Legal Check

Ensuring all legal aspects are in order is crucial. Verify:​

• • Business Registration: Compliance with local and national regulations.​
  • Intellectual Property: Protection of patents, trademarks, or copyrights.​
  • Contracts: Legally sound agreements with partners, suppliers, and employees.​

Addressing legal considerations proactively prevents potential disputes and assures investors of your startup’s legitimacy.

8. Develop a Compelling Pitch Deck

Your pitch deck is often the first impression investors have of your startup. Ensure it includes:​

• • Problem Statement: The issue your startup addresses.​
  • Solution: How your product or service effectively solves the problem.​
  • Market Opportunity: The size and potential of your target market.​
  • Business Model: How your startup will make money.​
  • Competitive Analysis: Your positioning relative to competitors.​
  • Financial Projections: Summarized forecasts and funding requirements.​

A well-crafted pitch deck is a short summary of everything we’ve mentioned so far in this startup investment checklist that conveys your startup’s value proposition and investment potential.

9. Define the Use of Funds

Clearly outlining how you intend to utilize the investment is vital. Specify:​

• • Allocation: Detailed breakdown of fund usage (e.g., product development, marketing, hiring).​
  • Milestones: Key objectives to be achieved with the invested capital.​

A transparent fund utilization plan demonstrates strategic planning and reassures investors of prudent financial management.

Next Steps: Make This Startup Investment Checklist Work for You

This concludes the startup investment checklist. While this is a standard list that you can follow, it will need constant tweaks. In fact, it’s important to better understand the investors you are pitching to, and tweak your pitch according to their requirements.

If you face rejection a few times, don’t lose heart but rather treat it as a learning experience. Ask for feedback from them and go back to work on it to make your next pitch stronger. At Stack’D, we will help you reach out to the right VCs, angels & accelerators that can take your business to the next level.