Fundraising is never easy, but when investors are tightening their wallets, it can feel impossible. Valuations drop, term sheets take longer (if they come at all), and competition for capital gets fierce.

But tough markets don’t mean fundraising is off the table – it just means you need to be smarter, more prepared, and more strategic. Investors are still backing great startups; they’re just being more selective. So how do you make sure you’re one of the ones that get funded?

Here’s how to fundraise when capital is scarce and investors are more cautious than usual.

1. Focus on Sustainable Growth, Not Just Big Vision

In bull markets, investors love big, bold ideas. In tougher markets, they care about sustainability and financial discipline. That means they’re looking for startups that:

✅ Have strong unit economics (your revenue model actually makes sense).
✅ Are capital efficient (not burning cash too fast).
✅ Have a clear path to profitability, even if you’re still focused on growth.

🔥 How to Make This Work for You:

• If your business is pre-revenue, focus on customer validation and strong market signals.
• If you’re generating revenue, highlight retention metrics and sustainable growth over vanity numbers.
• Show that you understand your burn rate and runway – and that you have a plan to extend both.

2. Get Your Financials Investor-Ready

When money is harder to come by, investors will scrutinise every number. If your financials are sloppy or unrealistic, it’s an instant red flag.

🔥 How to Make This Work for You:

• Ensure your financial model is solid – your revenue, expenses, and growth assumptions need to hold up.
• Have a clear use of funds – investors need to see exactly how their money will drive growth.
• Be transparent about runway – show how long your cash will last and when you’ll need to raise again.

Investors don’t expect you to have all the answers, but they do expect clarity and realism.

3. Adjust Your Valuation Expectations

If valuations were sky-high when you last raised, reset your expectations. Investors are taking a more cautious approach, and pushing for an unrealistic valuation can kill a deal before it starts.

🔥 How to Make This Work for You:

• Look at recent deals in your sector to understand where valuations are landing now.
• Be open to alternative deal structures, such as SAFE notes, convertible notes, or milestone-based funding.
• Remember: a slightly lower valuation now is better than no deal at all.

If an investor is interested but pushing back on valuation, focus on long-term upside – get the right investors in, prove your growth, and renegotiate in later rounds.

4. Target the Right Investors (and Build Relationships Early)

In tough markets, not all investors are writing cheques. Some are waiting for conditions to improve. Instead of wasting time pitching to the wrong people, focus on:

✅ Investors who are still actively deploying capital.
✅ Funds with dry powder (capital they’ve raised but haven’t invested yet).
✅ Strategic investors who see long-term value in your industry.

🔥 How to Make This Work for You:

• Warm up investors early – don’t wait until you’re desperate for funding.
• Research recent deals to see which funds are actually investing right now.
• Leverage existing relationships – ask your network for intros to active investors.

Even if some investors aren’t writing cheques now, building relationships early means they’ll be more likely to back you when the market shifts.

5. Be Open to Alternative Funding Options

If VC funding isn’t an option right now, consider alternative capital sources to extend your runway.

🔥 Options to Explore:

• Revenue-based financing – if you have recurring revenue, this can be a non-dilutive way to get cash.
• Grants and government funding – check if there are startup grants available in your industry or region.
• Strategic partnerships – some corporates or industry players will fund startups that align with their goals.
• Bridge rounds from existing investors – if your current investors believe in your vision, they may provide a smaller round to get you through.

Being flexible and creative with funding sources can give you the time you need to hit the right growth milestones.

6. Nail Your Story and Stand Out

When funding is scarce, investors are flooded with pitches. If yours sounds like every other startup out there, you’ll get lost in the noise.

🔥 How to Make This Work for You:

• Craft a clear, compelling narrative – why now? Why you? Why is this a massive opportunity?
• Highlight your resilience – if you’ve adapted to challenges and still found a way to grow, make that a selling point.
• Make it investor-friendly – focus on the upside but don’t ignore risks. Investors appreciate honesty.

Remember, investors aren’t just backing an idea – they’re backing founders who can execute, adapt, and thrive, even in a tough market.

Smart Founders Get Funded (Even in Tough Markets)

Yes, fundraising is harder when investors are cautious – but it’s not impossible. The startups that get funded are the ones that:

✔️ Have a clear financial plan and capital-efficient growth.
✔️ Target the right investors and build relationships early.
✔️ Stay realistic on valuation and open to flexible deal structures.
✔️ Stand out with a compelling story and strong execution.