Resources for insight and
inspiration
Guides
Insights
Down Rounds in Startup Funding: Navigating Valuation Challenges
In the dynamic world of startup financing, not every funding round represents an upward trajectory. While founders and investors alike prefer to see steadily increasing valuations, market realities sometimes necessitate a different path.
Startup Due Diligence: Essential Preparation for Funding and Growth
In the startup journey, few processes are as critical - or as intimidating - as due diligence. Whether you’re raising venture funding, preparing for acquisition, or negotiating a strategic partnership, how well you handle due diligence can directly affect your valuation, deal terms, and long-term growth trajectory.
Raising Money From Non-Accredited Investors: Expanding Your Funding Options
Traditional startup funding often relies on accredited angels and venture capitalists. But thanks to regulatory changes, startups can now raise capital from a much wider group - non-accredited investors. This shift opens up new possibilities for founders to access funding, turn customers into stakeholders, and build brand communities.
FAQs
Open allDo non-accredited investors get voting rights?
Not necessarily. Many startups issue special share classes or SAFEs without voting rights.
Can I advertise a Reg CF offering?
Yes, but only through an SEC-approved crowdfunding portal. Marketing must follow specific rules.
When should I start building investor relationships?
As early as possible - even before you need funding. Building trust early increases your chances of raising capital later.
Can I raise equity crowdfunding and VC funding at the same time?
Yes, but coordination is key. Some VCs view crowdfunding cautiously, so alignment in terms and messaging is important.
Do angel investors expect board seats?
Typically no. Most angels are hands-off and contribute via mentorship or networking, while VCs are more likely to take governance roles.
What’s the difference between an incubator and an accelerator?
Incubators provide long-term support for early ideas, while accelerators are shorter, intensive programs focused on rapid growth and fundraising.
What happens to SAFEs or notes at the seed round?
They usually convert into equity when a priced round (like Seed or Series A) is raised, based on the agreed valuation cap or discount.
Do I need legal documentation for a friends-and-family round?
Yes. Even informal investments should use proper SAFEs or convertible notes to avoid disputes and support later rounds.
When should I raise a Series A?
Most companies pursue Series A once they can show consistent product-market fit, revenue growth, and a scalable business model.
What is the difference between pre-seed and seed funding?
Pre-seed supports MVP development and early testing, while seed funding typically backs a product already showing customer traction and involves formal equity.
How does venture capital affect founder control?
Taking VC investment usually means giving up some ownership and board influence. This can shift how major company decisions are made.
What are alternatives to venture capital?
Alternatives include bootstrapping, private investors, strategic partnerships, and business loans. These options often provide more flexibility while preserving founder equity.
What do venture capitalists expect in return?
Most VC firms expect 10–20x returns within 5–7 years, which places heavy emphasis on rapid growth and eventual exit strategies.
Is venture capital right for every startup?
No. VC funding is best suited for startups with large market opportunities and the potential to scale quickly. Many successful companies grow without venture backing.