Our recent global research of startups across the AIN network highlights some of the key challenges facing startups seeking fundraising. But how can they overcome them and win investment in 2025? To succeed, startups must adapt to changing macro-economic conditions, prioritise their own mental well-being, and truly understand the investor’s perspective. Let’s deep dive into the findings.
There are signs of a resurgence in global confidence in the investment landscape as we face 2025. This was a key finding from our global survey of startups in three of our largest territories, the USA, UK and Australia.
This renewed entrepreneur confidence aligns with the sentiment expressed from our investor community in a separate survey earlier this year. A majority revealed they were planning on increasing their level of investment. It is a welcome sign of optimism returning after a difficult two years with high inflation, economic challenges and lower investment activity.
The caveat is that we are in a much changed landscape and an uneven global performance. One of the big challenges that came through from the research was the fact a majority of startups lacked a strong understanding of the fundraising process. Yet a solid understanding is an absolute table stakes requirement of survival, with so much of a founder’s time spent on the grind of fundraising.
Startup life is by its nature in a permanent state of flux, shaped by a myriad of factors, including economic conditions, technological advancements, and government policies. The startups most likely to succeed are those that follow Charles Darwin’s maxim:
“It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”
Let’s look at the key findings of our research and take outs for startups.
1. Optimism Amidst Challenges
Despite economic headwinds and ongoing challenges with fundraising, a significant majority of startups in all three countries remain optimistic about their future prospects. Although confidence varied.
- Australia: A whopping 80% of Australian startups are optimistic about the next year, with 48% expressing very high optimism. While the economy has been more sluggish in the past year, strong growth is predicted for the next year.
- US: 71% of US startups are optimistic, with 43% expressing very high optimism. While there have been concerns expressed about the impact of potential tariffs, Trump’s tax cutting agenda has created optimism in the money markets and his pick of a renowned global investor as treasury secretary could bode well for US startups.
- UK: Two-thirds (68%) of UK startups are optimistic about the next 12 months. The UK has weathered some severe storms, including Brexit and a tough recovery from COVID. The recent Budget has led to an increase in National Insurance costs for small businesses, but on the upside the rumoured large hike to Capital Gains Tax and Business Asset Disposal Relief didn’t occur.
2. The Ever-Present Challenge of Fundraising
Securing funding continues to be a primary hurdle for startups. The process is often perceived as complex and time-consuming, with many founders feeling unprepared. The UK has the poorest understanding of the fundraising process, with only 44% of startups reporting feeling good about their understanding. This is followed by the US (46%) and Australia (55%).
The lack of understanding is concerning given that securing investment remains a top priority.
- Australia: 71% of Australian founders cited securing investment as their biggest challenge.
- US: 84% of US startups identified securing investment as a top priority.
- UK: 74% of UK startups listed raising investment as one of their top challenges.
3. The Mental Health Toll
The demanding nature of running a startup is significantly impacting the mental health of founders.
- Australia: 54% of Australian founders reported their mental health had been impacted, with 16% experiencing a great impact.
- US: 59% of US founders reported their mental well-being had been impacted, with 27% experiencing a great impact.
- UK: 57% of UK founders revealed their mental well-being had been impacted, with 25% experiencing a great impact.
Founders revealed they rely on various strategies, such as mindfulness, social support, and outdoor activities, to cope with stress.
4. Key Factors Driving Investment
For those startups who have successfully raised in each country, a common picture emerges as to why investors backed them, with profitability and scalability the top reasons given.
Australia: 30% of investors cited profitability as the top factor and 26% cited scalability as the second.
US: 25% of investors cited profitability as the top factor, 17% scalability.
UK: 24% of investors cited profitability as the top factor, 18% scalability.
A strong business model and growth potential are the proven crucial factors in securing investment.
Takeaways for Startups
- Build Strong Foundations: Focus on developing a robust business model, a scalable product, and a talented team. Build on these fundamentals and ensure you elevate their impact in any deck once you are ready to seek funding. This is the magic formula to win over investors.
- Prioritise Mental Health: This is not a nice to have but critical for you to be on your A-Game in a world where the strongest mentally will survive the harsh rigours of the fundraising process. It is not a sign of weakness to acknowledge when the going gets tough. Invest in your mental well-being through mindfulness, social connections, and self-care. There are a range of apps to support meditation and mindfulness, like Calm and Headspace. There are also some great communities of founders that can offer great mutual support. You are not alone.
- Educate Yourself on Fundraising: Fully understand the fundraising process, build relationships with investors, and be prepared to pitch your business effectively. AIN has some great resources to support this in our Learn section. There are also some really good books on the topic by experienced angel investors including Angel Think by Phil McSweeney and the Money Train by David Pattison.
- Adapt to Changing Conditions: Be agile and adaptable to market trends and economic fluctuations. Staying abreast of changes and being alert to changes in your sector is a smart way of staying ahead. Industry publications and the tech media are great resources.
By addressing these key areas, startups can increase their chances of success.
On the back of the research, we will be publishing a series of articles ensuring startups can be ‘investment ready’. Check out our Meet The Investor series for the inside track on how to win over investors in a much changed landscape.
The lesson for 2025 is very much: Adapt and win.
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