What early-stage investors really look for: traction, team, and a model that scales. It's about conviction, not just your deck.
In the world of early-stage fundraising, understanding what to pitch is just as important as how to pitch. Most founders spend significant time refining their deck, rehearsing their narrative, and polishing their financials. But what truly moves investors? Beyond the buzzwords and frameworks lies a consistent pattern of qualities and signals that investors rely on to separate noise from opportunity. At ThatRound, where we see a wide spectrum of both startups and fundraising services, we know how important it is to decode the investor mindset. This isn’t just about ticking boxes — it’s about reducing risk and earning belief.
At the heart of every funding decision is a fundamental question: Is this worth solving? Investors look for clarity and conviction around the problem being addressed, but even more importantly, they want to see evidence that the opportunity is sizeable and growing. Vague claims like “everyone needs this” rarely fly. Founders need to demonstrate a well-researched, underserved segment within a growing market. This is where disciplined market sizing — TAM, SAM, SOM — can work in your favour, not just as slides but as tools to show understanding. The most investable startups connect a specific pain point to a market insight that others have missed or ignored.
Execution beats ideas. Investors bet on founders — individuals with the insight, grit, and operational focus to turn a concept into a business. A founding team that combines technical expertise with commercial savvy will always stand out.
At the recent London Biotechnology Summit, during a panel discussion on investor decision-making, Emmi Nicholl, Managing Director of Cambridge Angels, shared this insight:
“The team slide is always the first one I scroll to. For me, it's the most important. If the founding team is credible and clearly knows their space, that’s the first box ticked.”
Investors also look for cohesion: Do the founders complement each other? Have they worked together before? Do they bounce off each other with energy and trust? Investors often assess whether a team can survive the inevitable pivot, not just launch the initial product. Solo founders aren’t a deal-breaker, but in early stages, they carry more burden to prove they can attract top talent and build a team around them.
It’s not an imperative to be generating revenue to raise — but you do need traction. And revenue is probably the foremost signal of traction. Wesley Fogel, founder and fundraising advisor for early stage startups says:
“Founders paint grand visions, but a single ‘yes’ from the payer says more than a thousand slides.”
That said, pre-seed and seed investors know the product may still be evolving, so may consider evidence of market validation in lieu of revenue. This can include user signups, waitlists, letters of intent, successful pilots, or even virality metrics. These together show that the team can create momentum. Speed of execution, feedback loops, and adaptability are all proxies for future success. Investors pay close attention to how quickly founders act on feedback and what they learn from the process. These signals reveal much more than a polished roadmap. Bradley Jones, Co-Founder of Sowing Capital (Pre-Seed Investor Syndicate) comments on the importance of these signals of traction:
“Often at the pre-seed and seed stages, where Angel investors are more vital to close a round, investors can be less sophisticated and often sector agnostic. Many don’t do angel investing full-time, so when it comes to evaluating early-stage ideas, they often rely heavily on traction to demonstrate real demand — and of course, the right founder to go after it.”
Investors want to see that a startup knows how it will eventually make money. But more than that, they want to know the model is scalable and the economics are sound. A complex or vague revenue model is a red flag, especially when paired with high customer acquisition costs or weak gross margins. At this stage, simplicity is a virtue. Founders should be able to explain their model in a sentence, with early experiments or pricing tests to show they’re testing what works. Importantly, they should also show where value accrues and how margins improve with scale.
The best investors think five years ahead. They want to know what stops others from copying you once you prove the market exists. This doesn’t always mean patents — it can be a proprietary data advantage, a distribution moat, or strong community network effects. Sometimes it’s just about being first and moving fast. But one thing is certain: claiming “we have no competitors” rarely instils confidence. What investors want to see is that the founder knows the landscape and has a clear plan for outpacing the competition — not by brute force, but through better positioning, insight, or technology.
Early investors care about exit potential, even if the exit is years away. They want to understand how the business could become a category leader, or what a meaningful acquisition might look like. It’s not about having a rigid plan, but about thinking big and showing how the early milestones feed into that long-term trajectory. Vision is what helps an investor justify risk. But vision without execution is just hope — what matters is tying the vision to achievable next steps and measurable traction.
Messy cap tables and poorly structured early rounds are a common reason deals fall apart. Investors want transparency and clean ownership — no hidden clauses, no excessive advisor equity, and no sign that the founder has already given away too much too soon. Equally important is how the money will be used. A thoughtful, milestone-driven use of funds — anchored in growth, not survival — signals maturity and readiness. A £300k raise with no defined plan beyond “build MVP” or “run ads” isn’t compelling. Investors want to fund ambition backed by logic.
There is one factor that can’t be measured in metrics or mapped on a deck: trust. Investors often talk about “founder-market fit,” but what they really mean is: Do I believe this person is the right one to build this business? That belief is built in conversation, not just pitch decks. It’s why warm introductions matter and why platforms like ThatRound, which connect founders to credible, vetted fundraising services, can make all the difference. The X-factor may be ineffable, but it’s real — and it’s often the tipping point in early-stage investing.
In summary, raising money is about more than just raising capital — it’s about building conviction. Startups succeed not because they check every box, but because they reduce investor doubts and amplify belief. At ThatRound, we’re building a future where founders don’t have to waste months navigating a fragmented ecosystem to find the right partner or investor. Instead, they can access the entire market from one place, with the tools to prepare, compare and confidently fund their next round.
