Lakshmi Natarajan is a Global Leader, Fractional Executive, Board Advisor and Investor collaborating with corporations and startups.
Over the past few years, I’ve had the privilege of sitting on both sides of the table—as an entrepreneur building my consulting/advisory firm while navigating the investor ecosystem. One thing is clear: the funding landscape has changed and is ever-evolving.
The New Reality Of Fundraising
According to Crunchbase, global venture funding reached nearly $314 billion in 2024, a modest 3% increase from 2023, but still well below the record of 2021. The rebound signals renewed investor activity, but with sharper scrutiny. Capital is flowing again, yet selectively. Investors are no longer chasing “the hype”; they’re rewarding verifiable traction with a focus on customer and product, not just innovation alone.
This shift isn’t a slowdown; it’s a reset, and one that is creating stronger companies and healthier partnerships.
While the total number of U.S. VC deals declined by 936 transactions, total deal value rose $47 billion year over year. This means investors are backing fewer startups, but writing larger checks for resilient, validated business models.
The biggest beneficiary has been artificial intelligence (AI). AI startups captured nearly one-third of global venture capital, growing over 80% YoY. And median pre-money valuations for AI startups hit $17.9 million (Seed) and $50 million to $52 million (Series A)—roughly 30% to 40% higher than sector averages.
The takeaway: money is available, but it flows to founders who demonstrate product-market fit, product-customer fit, financial discipline and sustainable technology.
For Founders: How To Fundraise With Focus
1. Focus on customers and cash flow. In my own advisory work, I remind founders that revenue generation is the best validation. A paying, renewing customer tells a more convincing story than a polished pitch deck or amazing product innovation with no customers.
2. Lead with market intelligence and data-backed storytelling. Vision inspires, but competitive insight and data close the deal. Ground your pitch in verifiable Total Addressable Market (TAM) figures, market share trends and customer traction, while showing how you differentiate from competitors and capture real demand.
3. Master your metrics. According to CB Insights, 38% of startups fail because they run out of cash.
And according to multiple sources of data, including Andreessen Horowitz, investors expect founders to know these key metrics which define a healthy, scalable business:
• maintaining a Lifetime Value to Customer Acquisition Cost (LTV/CAC) ratio above 3:1 for efficient customer acquisition;
• churn below 5% for strong customer retention;
• gross margins over 75% to demonstrate operational efficiency for a SaaS business; and
• a runway of 12 to 18 months, providing the financial stability needed for sustained growth and investor confidence.
4. Build relationships early. A Substack newsletter recommends that founders start soft outreach three to six months before raising. Investors invest in progress they can witness.
5. Explore non-equity options. In 2024, U.S. venture debt financing reached a record-high $53.3 billion, up approximately 94% from the prior year, as startups sought alternatives to highly dilutive equity rounds. In addition, non-dilutive grants can offer founders a powerful way to fund innovation without negotiating valuation too early. By combining equity with strategic use of debt and grants, founders can reduce ownership dilution, extend runway, strengthen their capital structure and better position for future growth.
6. Operate with financial discipline. Walk into every raise with a capital-deployment roadmap, cash-flow visibility and milestone-based targets with measurable KPIs. Execution clarity and agile business planning build investor confidence.
For Investors: How To Back Builders With Balance
1. Value realism over hype: Medium Series A for non-AI valuations stabilized at $40 million in 2024. Outliers above this range without strong metrics warrant deeper diligence.
2. Examine execution, not just vision. A DocSend study found VCs spend under four minutes reviewing a pitch deck. Go beyond the slides: study the revenue model, churn, retention and payback periods.
3. Prioritize strategic alignment. Capital alone doesn’t accelerate growth; expertise and experience does. When investor know-how complements founder execution, scaling happens faster.
4. Reward transparency and governance. Series A due-diligence cycles now span, on average, three months. Founders who maintain organized data rooms and proactive communication demonstrate leadership maturity—a strong predictor of long-term success.
The Path Forward
For founders, your customers are your best investors. Show adoption, show retention, show results, show value creation.
For investors, the opportunity lies in backing not just visionary ideas, but teams that combine innovation with fiscal clarity and operational strength.
The market has matured. The highs of 2021 have settled into a healthier balance that now favors partnership, accountability and results-driven execution.
As both a founder and an investor, I’ve seen that the best outcomes happen when fundraising becomes relationship-building and investors can serve as growth partners, not just financiers. But again, the capital required to grow a business is dependent on the company’s decision as they seek their investment growth partner.
Regardless, in today’s market, capital does not chase hype; it follows performance.
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