Overcome funding challenges to secure investment for your start-up
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Posted: Fri 14th Mar 2025
12 min read
Securing investment for your start-up can feel like an uphill battle, especially if you’re navigating the complex world of investors for the first time.
Many founders face significant challenges when trying to access the capital they need, whether it's a lack of traction, approaching the wrong investors, working out how best to value their business or simply not knowing where to start to find the right funding sources.
In this blog, I’ll get into the reasons why securing investment for your start-up or business can be difficult and offer practical solutions to help you overcome these hurdles. Whether you're struggling to get your first round of funding, or scaling to the next stage, I’ve got actionable tips to set you on the right path.
Why is securing investment so hard?
There are several reasons why securing investment for your start-up can be particularly difficult, especially for early-stage entrepreneurs. Some of the most common challenges include:
1. Approaching the wrong investors for your stage of business
One of the biggest mistakes founders make is approaching investors who aren’t a good fit for their stage of business. Different investors have different attitudes to risk, and it’s crucial to target those who are aligned with your growth phase.
Ideally, you want to focus on finding investors who back businesses at your current stage. If you are an early-stage business, it is worth focusing on angel investors or seed investors who are more likely to understand the risks involved and offer the capital you need.
Conversely, if your business is well-established with fast growing revenue, venture capitalists (VCs) may be better suited to your business, as this type of investor is focused on businesses that are established and growing fast.
2. Not having enough traction
Investors want to see evidence that your business is on the right track before they commit to investing. If you don’t have enough traction or proof that your business can grow, you’ll likely struggle to secure investment.
Before seeking investment, focus on achieving meaningful milestones. These can include launching your product, building your customer base, generating revenue, or demonstrating a clear product-market fit. Investors need to see that you’ve already made progress with your start-up, or that your business is growing.
3. Not knowing where to find investors
Finding investors who are genuinely interested in your business can feel like searching for a needle in a haystack. Many founders don’t know where to start or how to connect with the right investors.
A good place to start is by creating a profile of the type of investors you are looking to attract into your business. What skills do you want them to have? Do you want an investor who will be “hands on” in the business or someone who might take a board role?
Then, take time to research and identify investors who meet this profile and have a history of backing start-ups in your industry and at your stage of growth. Platforms like AngelList, the Angel Investment Network (AIN), and Barclays Demo Directory can be great starting points for finding investors who are interested in your type of start-up.
Additionally, seeking advice from experienced mentors or advisers can help you navigate this process more effectively. On Focused For Business’ Funding Accelerator programme, for example, we show you how to create a Target Investor Profile and provide you with a 'hit list' of investors that match that profile so you can start your investor outreach.
4. The challenges for underrepresented founders
Securing investment for your business is harder for underrepresented groups, including female founders, ethnically diverse founders, neurodiverse founders and those based outside of London. Prejudices, biases and systemic barriers can make it even more difficult for these entrepreneurs to gain access to the investment they need to succeed.
Given these types of barriers take time to break down, it’s essential to build a strong, supportive network around you to provide the practical advice and motivation needed to overcome these obstacles. Surround yourself with other founders willing to share from their similar experiences, and seek out advisers who understand the challenges you face. Exited founders and founder advisers are particularly good sources of practical tips and advice.
Practical tips for securing investment
Now that I’ve covered some of the common challenges of securing investment, let's explore some practical solutions.
1. You have different funding options at different stages
Securing investment often means exploring different types of financing at different stages of growth. As your business evolves, so too will your funding needs. From grant funding to debt financing or equity investment, it’s crucial to understand the best time to use each funding source, but also the pros and cons of each option.
Tip: In the early stages of your business, grant funding could be ideal to help you invest in building your initial product or service (usually referred to as the Minimum viable product or MVP). Once you have a strong product and your first happy customers, business angel investment or convertible notes can be a good form of investment to help you build traction.
As your business grows, venture capital or venture debt can be a good fit for scaling your business.
2. Prepare your investor documents to highlight achievements
When approaching investors, make sure your investor documents clearly highlight your business’s achievements so far. Investors want to see your progress and understand how their investment will help your start-up reach its next stage.
Tip: Your pitch deck, financial projections and business plan should clearly showcase the traction you’ve made to date. As far as possible, focus on highlighting hard evidence – actual numbers that show the size of your customer base or revenue or metrics (like customer acquisition cost (CAC) and customer lifetime value (CLV) – which speak for themselves in terms of showing the progress your business has made.
From explaining the problem your business solves, your go-to-market strategy and your plans for scaling, it is important to portray a clear and consistent narrative. And, don’t feel you have to hide anything from investors. Being able to acknowledge there are challenges in the business, but being ready to discuss how you will tackle these, builds your credibility with investors.
3. Be focused in your investor outreach
Rather than waste time talking to anyone who says they are an investor, I would recommend being very focused in your investor outreach. As mentioned, develop a profile of your ideal investor and use this to focus your investor search.
Attend start-up networking events, pitch competitions and industry-specific conferences to meet potential investors. Also, consider joining incubators or accelerators, which can help connect you with investors who are actively looking to fund start-ups.
Tip: Using the Companies House website can be a good way of identifying investors who have backed similar businesses to yours. Platforms like Scribe and Ship Shape are also useful as they provide search tools to help you find the right investors.
4. Overcoming prejudice, bias and stereotyping
As an underrepresented founder, you may face additional hurdles, but it’s essential to stay positive and resilient to make progress.
Tip: Look for investors who prioritise diversity and inclusion when they make investments. For example, networks like Mint Ventures and funds like Arosa Capital actively support female founders.
Seek out expert advisers and accelerator programmes focused specifically on raising investment, that can provide practical tips on overcoming biases and give you confidence when faced with challenging investment situations.
Building a supportive community of like-minded founders can also be invaluable in helping you stay motivated and resilient. Focused For Business’ Funding Mastermind community meets fortnightly (online) and provides a safe space for founders and business owners looking for support in getting their funding over the line.
Getting focused in readiness for funding will benefit your business
Preparing your business for investment may seem daunting and a lot of work, but when you focus and look at your business through the eyes of an investor, there are unexpected benefits. You’ll gain clarity on what is driving business success and you’ll find that your plan for delivering further growth really comes into focus.
This will help you attract investment, but surprisingly, as it may seem, it may also show you that you don’t need as much funding as you think, or that there are different ways to grow your business whilst also keeping control. And that can be just as powerful as securing investment!
Wondering whether your business is ready for investment? Answer 10 quick questions and gain tailored feedback on where you need to put your focus to secure investment.
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