Article
The UK can invent world-class chips. Scaling them is the hard part
UK chip startups are raising record rounds, but most of the capital still isn’t British. UKSC’s CEO on why this is.
Mia Palmén
October 27, 2026
How to Raise Capital for a Startup
At ThatRound, we understand that securing funding is more than just a financial milestone because it’s the backbone of any startup’s ability to launch, grow and succeed. For first-time entrepreneurs, capital is often needed to bring an idea from concept to execution, covering expenses like product development, market testing and initial hiring. For established startups, funding supports scaling, market expansion and innovation, providing the agility to adapt to changing market demands and competition. Whether you’re at the seed stage, seeking venture capital or exploring alternative funding, knowing which route to take - and how to prepare - is essential to long-term success.
There are various ways to raise capital for a startup, from bootstrapping with your own savings or revenue to grants and debt. For many startups, especially those aiming for high growth, equity investment is the main route: raising money by selling shares to investors. That ranges from crowdfunding, where lots of smaller investors each put in a little, to institutional funding for larger rounds. ThatRound focuses on equity fundraising, matching founders with the investors and fundraising services that fit their round.
Why Raising Capital Is Critical for Startups
Capital is the lifeblood of startup growth, giving businesses the financial runway they need to move beyond organic expansion. Without sufficient funding, startups often face stalled growth or collapse, with 38% of startup failures linked to cash flow shortages, according to recent studies. For early-stage startups, external funding provides essential support for product development, market entry and customer acquisition. As companies grow, capital enables scaling, team expansion and market competitiveness.
Timing matters too, especially in sectors like technology and biotech, where getting to market first can decide who wins. Well-timed funding pays for R&D, sharper products and new markets. And raising isn't only about growth. It also shows that investors believe in what you're building. The flip side is that you need a plan, so you don't give away too much equity or end up with investors whose goals don't match yours.
How to Raise Capital for a Startup Focused on Growth and Scale
The right funding at the right time can turn steady progress into real momentum. Funding enables startups to build the infrastructure needed to scale operations, develop new products and enter new markets faster. Without external capital, growth is often limited to slow, revenue-based reinvestment, which can be insufficient to compete with better-funded competitors.
Securing funding allows startups to hire specialised talent beyond their initial generalist teams, bringing in experts in product development, marketing and operations. For example, tech companies often require engineers or data scientists, while consumer-facing businesses may need marketing experts. Well-timed hiring ensures startups can execute their growth plans efficiently.
Funding also drives geographic expansion by helping startups localise products, comply with regional regulations and establish distribution networks. It also supports continuous product development, enabling businesses to refine their offerings and address market demands. Without sufficient funding, startups risk falling behind competitors who can act more quickly.
Having money in the bank also gives you room to act when opportunities come up. You can form partnerships, win users early and change direction when you need to. In fast-moving industries, that timing can make or break a business.
Validating Your Business Idea
External funding offers more than just financial support because it serves as market validation that investors believe in the startup’s long-term viability, too. This validation often attracts additional opportunities, like strategic partnerships, customer growth and media visibility. When well-known investors commit funds, it builds credibility, creating a halo effect that can influence other stakeholders to get involved.
It reassures early adopters and enterprise customers too. Funded businesses tend to look more stable and more likely to deliver, which can mean stronger relationships and bigger contracts. Growth builds investor confidence, and investor confidence helps you grow.
But not all funding is beneficial. The wrong investors can push for short-term gains at the expense of long-term growth, add restrictive conditions or take too much equity. Founders should carefully evaluate investor fit by considering factors such as:
- Equity dilution: How much ownership are you giving up, and will it affect who makes decisions?
- Strategic alignment: Does the investor bring useful mentorship, networks or sector knowledge?
- Terms of engagement: Are there performance targets or exit conditions that could cause problems later?
Choosing the right investors means you get the benefits of funding without the conflicts that can hold you back.
Exploring Funding Options for Startups
There are lots of ways to fund a startup, but not every route suits every business. Your stage, market and growth plans all shape the right mix. Founders must carefully balance short-term needs with long-term goals, ensuring they choose an option that supports both sustainable growth and risk mitigation. Understanding the benefits and challenges of each funding route is crucial to developing a strategy that aligns with business objectives.
Bootstrapping
Bootstrapping means funding the business yourself, through personal savings, retained earnings or reinvested revenue instead of seeking external investment. Many successful startups, including Mailchimp and Basecamp, both started this way, using early revenue to grow steadily without outside obligations.
One major advantage of bootstrapping is that founders retain full ownership and decision-making authority, without facing investor-driven pressures to scale prematurely. Since bootstrapped businesses are typically focused on lean growth, some achieve profitability sooner than externally funded companies.
The trade-off is speed. Without outside capital, it's harder to hire specialists, fund product development or invest in marketing, and cash flow can force tough calls like delaying key plans. Bootstrapping works best for founders with their own resources or businesses that make money early. In capital-intensive sectors like biotech or hardware, it's rarely enough on its own.
Equity Investment
Equity investment involves raising capital by selling shares of your business to investors who, in return, gain partial ownership and an equity stake. Common equity investors include angel investors, venture capital firms and institutional investors. It's the usual route for startups aiming to grow fast.
Equity investors not only inject substantial capital but also provide strategic advice, industry connections and mentorship. For example, securing funding from a well-known venture capital firm can enhance a startup’s credibility, attract partnerships and facilitate future funding rounds. This combination of financial backing and strategic guidance is a key driver for high-growth startups.
The trade-off is control. You'll share decision-making, and dilution can limit your say, especially when investors hold big stakes or board seats. Raising equity also takes time: you'll need a compelling pitch, legal support and a lot of investor outreach. Without proper preparation, you risk rejection or terms that hold you back later.
Grants
Grants are non-repayable funding from government bodies, private institutions or research organisations. They're designed for innovative, socially impactful or research-based projects, and are especially useful in sectors like technology, healthcare and renewable energy.
A key benefit of grants is that they provide capital without requiring equity or repayment, making them ideal for startups focused on long-term innovations or R&D. Unlike loans, grants allow startups to grow without debt obligations or dilution of ownership, preserving their financial independence.
However, grants are often highly competitive and come with strict eligibility criteria, limiting access to only those projects that meet specific conditions. The application process can be time-consuming, involving detailed proposals, technical documentation and reporting requirements. Additionally, grants typically impose restrictions on how the funds can be used, which may reduce flexibility when allocating resources to broader business needs.
Debt
Debt financing lets startups borrow capital through loans, credit lines or bonds while retaining full ownership. It works best for businesses with predictable cash flow or recurring revenue.
A key advantage of debt is that once the loan is repaid, the startup has no further obligations to lenders, unlike equity financing, which involves long-term shareholder commitments. Debt can be used to finance short-term projects, working capital needs or equipment purchases without relinquishing ownership. In some cases, government-backed loans offer favourable interest rates to reduce financial strain.
However, debt financing comes with the risk of repayment obligations, which may strain cash flow if the startup’s growth is slower than expected. High interest rates can further exacerbate this risk, particularly for early-stage companies. Careful cash flow management and financial forecasting are essential to avoid overleveraging. Additionally, many lenders require collateral or personal guarantees, potentially placing founders’ personal assets at risk if the business fails to meet its obligations.
How to Prepare for Raising Capital
Learning how to raise capital for a startup begins with presenting a compelling case that highlights the company’s potential for growth and profitability. Requiring strategic financial planning, strong market positioning, and a well-prepared pitch that reassures investors of the startup’s ability to scale, manage risks, and deliver long-term returns. Get these right and you'll go into investor conversations prepared and confident.
Creating a Solid Business Plan
Your business plan sets out your mission, growth strategy and financial roadmap. Investors use it to judge whether your business can grow sustainably and handle challenges along the way.
Key components of an investor-ready plan include:
- Market analysis: Insight into industry trends, target customers and competitors
- Financial projections: Revenue forecasts, cash flow models and profitability milestones
- Operational strategy: Plans for production, marketing and key hires
A strong plan demonstrates scalability and risk mitigation, reassuring investors that the startup is well-prepared to deliver returns.
Building a Compelling Pitch Deck
A strong pitch deck visually highlights a startup’s value proposition, market potential and financial outlook. It’s designed to attract investor interest and provide key information concisely.
Key sections include:
- Problem and solution: Define the market problem and how your product or service addresses it
- Market opportunity: Show market size and growth potential
- Traction: Highlight key milestones, such as revenue growth or product development
- Financials: Share high-level forecasts and how much you're raising
Founders should focus on clarity and storytelling while using data and visuals to support their narrative. An engaging pitch helps investors quickly grasp your startup’s potential.
Demonstrating Traction and Market Potential
Traction shows that a startup has gained market validation and momentum. Investors view it as proof that the business model works and can scale.
Examples of traction include:
- Revenue growth from early sales or subscriptions
- User engagement metrics such as retention rates or active users
- Strategic partnerships that enhance reach or credibility
Strong traction builds investor confidence, making startups more attractive for funding. Focusing on key metrics that align with investor goals ensures the business stands out.
Challenges of Securing Startup Funding
Raising capital can be a time-consuming and complex process that requires persistence, strategic planning and strong positioning. Founders have to deal with investor scrutiny, competitive markets and wider economic pressures.
To successfully navigate these hurdles, startups must understand what investors are looking for and anticipate potential obstacles that could derail their fundraising efforts. The ability to adapt and execute a strategic funding plan often determines whether a business can secure the right investment or miss out on critical opportunities.
Navigating Complex Investment Processes
Securing external investment requires startup owners to demonstrate that their business is financially sound, scalable and well-managed. Due diligence is a key part of the process, during which investors meticulously examine a startup’s financial records, operational performance, market strategy and risk factors. This stage is particularly rigorous for startups seeking equity investment or large-scale venture capital funding, as investors want to minimise risks before committing significant capital.
Negotiating terms and legal structuring is another challenge. Founders must understand equity dilution, control provisions and investor rights, ensuring they don’t give away excessive control or future growth potential.
Missteps during this phase can lead to unfavourable terms or long-term constraints on business decisions. Tax-efficient schemes like EIS and SEIS can help attract investors, but startups must navigate the eligibility criteria and compliance requirements, which often require legal expertise.
The entire process can take several months, requiring continuous preparation and engagement with legal advisors. Founders must also be ready to address on-the-spot investor questions and adapt their proposals based on feedback. Without sufficient preparation, startups risk delays, reduced investor confidence or failure to secure funding.
Standing Out in a Crowded Market
With thousands of startups vying for investor attention, differentiation is critical. Investors are inundated with pitches and typically look for ventures that offer something unique, whether it’s a disruptive product, an underserved market or a significant technological breakthrough. Startups that fail to distinguish themselves from competitors often struggle to secure investment, as investors gravitate toward ventures with clear competitive advantages and scalability potential.
Start with a clear story about your value. What makes your product different, what problem does it solve, and why are you the ones to win? Back it up with data and research, and show you understand your competitors and how you'll beat them. Without that, even strong ideas can lose out to startups with clearer positioning.
Economic Factors Impacting Borrowing and Investing
External economic conditions heavily influence the availability of startup funding. During periods of economic uncertainty or downturns, like geopolitical events, inflation or recessions, investors may become more conservative. Debt financing becomes more expensive as interest rates rise, making it harder for startups to borrow. Similarly, equity investors may shift focus to lower-risk or later-stage investments, reducing funding options for early-stage ventures.
Startups reliant on debt financing may face additional challenges if cash flow is insufficient to meet loan repayments during periods of higher borrowing costs. But well-prepared startups that understand market cycles can time their funding efforts strategically by raising capital during favourable economic periods or securing longer-term funding that protects them from short-term volatility. Founders must stay informed about market conditions and remain flexible, ensuring they have contingency plans if investor appetite shrinks or loan terms worsen.
Ultimately, navigating these challenges needs resilience, adaptability and a proactive approach to funding strategy. By preparing thoroughly and understanding both internal business dynamics and external economic factors, startups can improve their chances of securing the right investment at the right time.
How ThatRound Powers Equity Investing for Startup Founders
At ThatRound, we understand that navigating the fundraising process can be one of the most challenging aspects of running a startup. Whether founders are seeking their first round of funding or preparing for Series A and beyond, identifying and connecting with the right investors requires significant time, effort and strategy.
Our platform eliminates inefficiencies by providing centralised access to funding, and help startups connect with the right investors. We make equity fundraising simpler, faster and more effective by enabling founders to compare and assess vetted fundraising partners so they can partner with the ones and access resources most suited, tailored to their growth stage and sector.
Our platform is designed to eliminate these inefficiencies by providing centralised access to vetted funding partners, streamlining the process and allowing founders to focus on scaling their businesses. We make equity investing simpler, faster and more effective by offering access to diverse funding options and pre-vetted resources that align with a startup’s needs.
Aggregated Fundraising Services Marketplace
Knowing how to raise capital for a startup means understanding a lot of different routes: angel networks, syndicates, early-stage VC funds, crowdfunding platforms, institutional brokers and specialist advisors. Most operate independently, which makes them hard to find and harder to compare.
ThatRound brings more than 300 angel networks, syndicates and early-stage VC funds into one place, alongside fundraising services that can help with specific parts of your raise. See who backs startups like yours, compare them on verified reviews, fee models and key criteria, then apply directly or ask for a warm introduction.
Our platform brings together a diverse range of trusted partners, including angel networks, crowdfunding platforms, corporate finance specialists, and venture capital funds.
This aggregated model allows startups to explore multiple funding options without having to conduct independent research or network-building from scratch. By curating and providing access to a wide range of funding options,ThatRound helps startups connect with networks of investors suited to their growth stage and sector. For instance, through our platform early-stage founders can apply to angel networks who can facilitate introductions to angel investors. Similarly, growth-stage startups can access venture capital firms and institutional brokers through tailored fundraising services.
This streamlined marketplace not only expands funding opportunities but also reduces the time and effort founders spend on identifying and approaching potential investors individually. With ThatRound, startups benefit from having multiple funding options available in one place, making the process more efficient and results-driven.
Diverse Funding Options
Every startup’s capital requirements are unique and a one-size-fits-all funding approach rarely works. That’s why ThatRound provides startups with a platform offering comprehensive tools, resources, and access to a range of funding options, allowing them to select the options that best fit their growth stage and goals. Whether seeking pre-seed investment for product development, Series A funding for scaling or late-stage capital for market expansion, our platform connects founders with the right mix of resources and services.
You'll also find specialist support on the platform, from pitch deck experts and advisors who help with valuation negotiations and term sheets, to crowdfunding platforms and institutional brokers. They don't invest themselves, but they can sharpen your story and get you in front of the right people.
This diversity of options ensures that startups can secure capital that aligns with their business strategy. By offering a range of funding services, ThatRound helps founders avoid over-reliance on any single method, reducing risk and ensuring long-term financial stability.
Time-Saving Platform
Raising capital can be a highly demanding and time-intensive process that diverts founders’ attention from building their products and scaling their businesses. Traditional fundraising often involves months of investor outreach, countless meetings and extensive due diligence.
At ThatRound, we recognise that time is a critical resource for startups and our platform is designed to minimise the administrative burden of fundraising.
ThatRound cuts out the research. Upload your deck and our AI analyst turns it into a pitch page that highlights what investors look for. You're then matched with investors who fit, and you can track applications, engagement and pitch views in one dashboard, with feedback on any declines. It's a clearer, faster path through your round, so you can get back to building.
