Proven Ways to Raise Capital for Your Startup Now: Personal Insights
Learn practical and proven ways to raise capital for your startup. Discover essential steps such as validating your problem-solution fit, building a committed team, understanding your market, and defining a go-to-market strategy.
Raising capital is one of the most exciting—yet nerve-wracking—steps on the startup journey. I’ve been there. Whether you’re just starting out or have already launched, you might wonder how to get that critical funding to scale your business. Over the years, I’ve learned that successful fundraising is more than having a great idea. It’s about preparation, demonstrating the potential of your business, and showing investors that you’re building something scalable.
I’ve been on both sides of the table—pitching to investors and advising other founders—and through those experiences, I’ve understood exactly what investors look for. Before you dive into raising money, you must take a few foundational steps. Here’s a practical guide I’ve personally followed, with insights from my journey, to help you raise the capital you need.
1. Validate Problem-Solution Fit with Surveys, Interviews, and Prototyping with Your Customers
Before you consider raising money, ensure you’ve nailed down one key thing: does your product or service solve a real problem? In my experience, validating the problem-solution fit is the most important thing you can do. If this step isn’t solid, no amount of funding will save you.
Here’s what worked for me: surveying 20 users, interviewing 20 users, and doing 20 prototype tests was the minimum threshold for validating the problem and solution. I didn’t rush into creating a polished product right away. Instead, I followed a simple yet effective approach:
• Surveying first: I began with surveys to get broad feedback. It’s an easy and quick way to understand the scope of the problem your product addresses. I used simple tools like Google Forms and Typeform to get a wide audience response. But don’t just focus on numbers—look for trends, common pain points, and recurring themes.
• Interviews next: After gathering survey responses, I went deeper with one-on-one interviews. This was where I could get to the heart of my customers' thinking. These conversations helped me understand the nuances of their frustrations and clarified how my solution could fit into their lives. These interviews were essential in refining my offering.
• Prototyping last: Once I had some solid insights, I moved on to prototyping. I found that creating a quick prototype—whether a simple wireframe for digital products or a basic model for physical products—was the best way to test my solution. I invited the same users to test it and gave them a chance to provide direct feedback, which allowed me to make crucial iterations.
I completed this entire process in about 4 to 6 weeks, and trust me, you can do it too with a small, dedicated team. This hands-on, customer-focused approach gave me the confidence to approach investors.
2. Build a Team with a Small Group of Committed People
I can’t stress this enough: when you’re raising capital, investors are not just investing in your idea—they’re investing in your team. Your team is the engine that will drive the company forward, especially in the early stages. And I’ve learned from experience that a small but committed team is all you need to start.
What I’ve learned: Having 2-4 full-time people who are 100% committed to the mission is the perfect starting point when preparing for fundraising. The team doesn’t need to be big but must be all in. In the early days, you’re not going to have a lot of revenue, so investors are investing broadly, sometimes entirely, in the people behind the business.
I’ve seen businesses succeed and fail based on the strength of their team. I can remember when we raised capital for a startup—I had a lean team, but we were all dedicated, aligned, and working towards a shared vision. That dedication showed, and it made investors take us seriously.
My advice to you: Be 100% committed. No maybes, no “ifs.” The team's commitment will keep you going when things get tough (and they will). You want to show investors that your team can execute the vision and that you’ll adapt to challenges along the way. If you’re not 100% sure who your co-founders or early team members should be, take your time and choose wisely. It’ll make all the difference.
3. Do the Numbers on Your Market TAM, SAM, SOM, and Unit Economics
When it comes to raising capital, there’s no room for fluff. Investors want to see solid numbers—especially regarding market size and unit economics. It’s easy to say, “Oh, it’s a $10 billion market!” but that won’t impress anyone unless you can back it up with data and a clear understanding of your niche.
Here’s how I approach this: You need to start with a realistic analysis of your market. A solid TAM (Total Addressable Market), SAM (Serviceable Available Market), and SOM (Serviceable Obtainable Market) analysis is critical to showing investors that there’s an actual opportunity.
• TAM (Total Addressable Market): This is the broadest view of the market—the total size of the opportunity. However, when raising capital, I always ensured I wasn’t just throwing out huge numbers. Instead, I focused on how this market applied to my product and where I could see traction in the short term.
• SAM (Serviceable Available Market): Once I had my TAM, I narrowed it down to my SAM—the portion of the market I could realistically target. This was where the rubber met the road. Investors want to see that you’re realistic about where you can play and what part of the market you can go after in the next few years.
• SOM (Serviceable Obtainable Market): This is where I got tactical. My SOM was the small slice of the market I could actually capture. It’s all about proving you can gain traction in a specific segment before trying to tackle the whole market. I’ve seen startups find success by owning a niche first.
And don’t forget about your unit economics—this is how much it costs to acquire a customer (CAC) and how much each customer brings in revenue (LTV). Investors care deeply about unit economics because they want to know that your business will be profitable at scale. In my startups, having these numbers in place and speaking to them confidently was a game-changer when raising capital.
4. Define a Clear Go-to-Market (GTM) Strategy to Find and Activate Your Customer
A killer product and a rockstar team are excellent, but you won't get far without a clear go-to-market (GTM) strategy. You need to know precisely how you will find and activate customers. This is where your customer acquisition strategy comes into play—and trust me, investors are watching closely.
What worked for me: Assuming you’ve completed the first three steps (which I recommend you do before you raise capital), it’s time to implement your GTM strategy. This strategy needs to be explicit, clear, and scalable.
Here’s how I broke it down:
• Customer segments: Who exactly are your customers? I’ve found that defining customer segments down to a granular level is key to reaching the right audience. I focused on identifying my ideal customers and understanding their needs and behaviors.
• Where they are: Once I knew who I was targeting, I focused on where they spent their time. Is it social media? Industry forums? Conferences? Email? Knowing where your customers are allows you to target them more effectively.
• How to reach them: Now that you know who they are and where they hang out, it’s time to think about how to get them. I looked at the most effective channels—whether through organic content, paid ads, inbound marketing, or partnerships—and built my strategy around that.
• Activation: Once you’ve acquired your customers, how do you turn them into loyal, paying users? I created clear steps for customer activation, whether that was through an automated email flow or a personal onboarding experience.
If you follow these steps and make your GTM strategy explicit, you’ll not only convince investors that you can find your customers but also that you have a repeatable, scalable plan to acquire them. Investors want to see that you understand how to create demand and that you have a strategy for turning that demand into revenue.
Wrapping It Up
Raising capital is a big deal, but it doesn’t have to be intimidating. Focus on these four key areas: validating your product with real customers, building a strong team, understanding your market, and defining a clear GTM strategy.
In my own experiences raising capital, these steps were essential in gaining investor confidence and ensuring that the businesses I was working with were positioned to grow. Investors don’t just bet on ideas—they bet on people, market potential, and the ability to execute. If you take the time to do this foundational work, you’ll raise the capital you need and build a solid foundation for long-term success.
So, get to work! Your future investors will be impressed by the effort, strategy, and clarity you bring. And who knows? With the proper foundation, you’ll be on your way to building something incredible.
Book Recommendations
Here are two books that have been instrumental in shaping my understanding of startups, product development, and how to approach raising capital. These are not just must-reads—they’re game-changers for anyone looking to take their startup from idea to successful business.
Mike Parsons
1. The Lean Startup by Eric Ries
This book is a staple in the startup world, and for good reason. Eric Ries introduces the Lean Startup methodology, which revolves around using continuous innovation and customer feedback to build products that meet market demands. One of the key takeaways is the idea of validated learning—testing assumptions and hypotheses quickly to avoid wasting resources on things that won’t work.
Ries emphasizes the importance of launching a minimum viable product (MVP) to gather data and feedback before committing to large-scale development. It’s all about iterating fast and learning from your failures. This method helped me validate products quickly and avoid sunk costs that don’t bring real value. When raising capital, investors want to see that you can manage resources efficiently and learn quickly from customer feedback. That’s precisely what The Lean Startup teaches you to do.
If you’re interested, I’ve put together a detailed summary of The Lean Startup that dives into the core concepts and how you can implement them. You can check it out here: Summary of The Lean Startup.
Mike Parsons
2. Zero to One by Peter Thiel
Peter Thiel’s Zero to One is a brilliant guide for any founder on building a truly innovative company. While The Lean Startup focuses on building incrementally and testing assumptions, Zero to One takes a much bolder approach. Thiel stresses that the most valuable startups are those that create entirely new products or services rather than simply improving existing ones. This book pushed me to think outside the box and focus on monopoly businesses that dominate their markets with unique products that no one else can replicate.
Thiel also discusses the importance of thinking about the future radically differently and positioning your startup to create something new. It’s not just about competition; it’s about avoiding it by creating a fundamentally different product. I learned that to attract serious investors, you need to show them that your startup isn’t just another iteration of what already exists—it’s an entirely new way of solving a problem.
If you want to explore these ideas further, I’ve also created a comprehensive summary of Zero to One that explores how Thiel’s principles can be applied to your business. Look at the full breakdown here: Summary of Zero to One.