How to get funding in this economy: advice from an angel investor

Fast Company

5 days ago

The first company I built was in 2008; we closed our seed round in May, the housing crisis hit in August, and the world collapsed. I distinctly remember Sequoia Capital's ' RIP good times ' slide deck that September, which effectively killed the VC market overnight. We had only raised $500K and had overscaled our team. We tried to last as long as we could, but in March 2009 we had to raise again. I personally pitched 36 firms in person and they all said no.
That experience forever changed how I thought about fundraising for future companies. In 2025, we're facing a similarly volatile environment, with global economic and political uncertainties and a significant decrease in venture funding, making these lessons more relevant than ever.
Honestly, if you haven't already been proactive in preparing for tough economic times as a small business, it will be challenging to get out of the hole you might be in in the current market. But for founders who are just starting their journey, it's still a great time to start a company—there is a lot of talent available, really early-stage funding is mostly insulated from economic downturns, and you can build a product native to AI with a super lean team.
As a 3x founder and investor in over 100 startups, I've learned key lessons in building resilient businesses through market challenges. Here's my advice:
1. Refine Your Value Proposition
In uncertain markets, investors naturally become more risk-averse and cautious. That means it's more important than ever for your startup to present a compelling, crystal-clear value proposition. Your pitch should focus on solving real, pressing problems with a clear path to monetization and should explain why you are the best in the world at doing so. Avoid hyping growth projections and potential boom-time scenarios and instead, focus on grounding your forecasts in defensible data and unit economics, demonstrating a path to profitability and a viable business model. If your product already has some early traction, now is the time to double down on telling that story and highlighting those metrics. Make your core strengths obvious—whether that's revenue growth, customer retention, or product-market fit.
2. Explore Alternative Funding Paths
Valuations typically compress, deal cycles slow down, and investors become more selective during volatile periods. You should adjust your expectations accordingly. Raising less capital at a lower valuation may be necessary to survive and continue growing through those tough times. At the same time, you should be open and exploring alternative funding sources: Whether that be revenue-based financing, angel networks, family offices, strategic partnerships, or even crowdfunding. Another way companies bridge rough patches is through non-dilutive capital, like grants or government programs. Flexibility is key.
3. Extend Your Runway
Disruptions to the market can happen out of nowhere, sometimes for no reason. Founders should always be prepared and shift their mindset from 'growth at all costs' to 'efficient, sustainable growth.' The goal is to extend runway as long as possible—ideally 18–24 months—to weather any downturn and avoid needing to raise again during less optimal times. This means cutting the burn far earlier than you think you need to. Even during good economic times, keep your team very lean. Payroll typically dominates burn, so don't overscale your team based on your capital. Highlight to investors how you are being prudent with capital. Demonstrating financial discipline and adaptability shows maturity and resilience, which investors value even more when uncertainty looms.
4. Build Trust and Relationships
In volatile climates, trust becomes even more critical. Begin investor conversations well before you plan to raise. Building long-term relationships allows you to cultivate trust, get feedback, and stay top-of-mind. Focus on strategic investors who offer more than just capital, such as operational expertise or valuable networks for customer acquisition and talent recruitment. These investors are more likely to support you during market fluctuations. Maintain transparency about your company's performance and challenges—trying to gloss over issues can backfire. Use regular updates (emails, calls, or virtual meetings) to show progress and your ability to navigate a tough market while demonstrating the added value these investors provide.
While volatility raises the stakes, it also rewards founders who are resourceful, focused, and mission-driven. By tightening your fundamentals, adjusting expectations, and building strong investor relationships, you can still find the right capital to power your startup forward—even in the most unpredictable markets.