How To Get Venture Capital Funding For Your Startup

Looking to raise VC investment for your business? Read our complete guide for how to get venture capital funding and transform from startup to success story.

Venture Capital (VC) gives innovative startups with strong growth potential the financial resources they need to scale. From pioneering fintech giants like Monzo to industry-leading delivery firms like Deliveroo, VC-backed businesses are redefining the world of technology.

Knowing how to get venture capital for your startup is a crucial tool in understanding how to scale your business. 35% of all UK unicorns ever created have graduated from a Tech Nation programme, with our alumni raising more than £28b between them. Much of their success has been fuelled by venture capital, highlighting how crucial it is to know the startup funding landscape.

For a business looking to grow, learning about VC funding options will allow you to be prepared, and give you the necessary clarity and confidence to make important financial decisions for your business.

What is Venture Capital?

Put simply, venture capital is a type of financing provided by companies or funds to promising startups. And, in Europe, the UK is the biggest VC investment hub. UK startups raised more than $7b in VC investment in H1 2025, including the biggest first quarter fundraise of the past three years, and UK VCs typically raise 3-5x more capital than funds in France or Germany, according to The Tech Nation Report 2025.

Unlike other funding types such as bank loans which require repayment with interest, VCs take equity in the companies they fund. They therefore accept risk in pursuit of potential returns made if the business succeeds. As a result, VCs target innovative firms with a strong business strategy and long-term growth potential.

The potential for returns is the real key behind this kind of financing, so it is hugely important that startup founders know what their VCs are looking for so that they can be aligned and make decisions accordingly. Especially if you’re a SaaS business, many Seed investors aim for a punchy 100x return on their investment, meaning that if a VC invests £1m, they are hoping to make £100m back (in a best case scenario). Series A investors look for an investment to return 10-15x; and later-stage investors aim for 3-5x.

A company’s valuation is a critical factor in determining how much equity an investor receives for their capital, and VCs balance their target returns against company funding needs and risk assessment to negotiate valuations. Investment amounts are often driven by milestone requirements, while valuations reflect the market opportunity and risk.

Beyond financing, VCs typically offer business guidance, industry connections, and strategic support to help their portfolio companies grow. Generally, they aim to eventually sell their stake in the business when the company is acquired or goes public, usually within 5-10 years, and this is precisely how VCs make money – by turning their illiquid assets (equity stakes) into cash through strategic exits that generate significant returns for their investment fund.

The Advantages and Disadvantages of Venture Capital

Like all funding types, venture capital has its strengths and weaknesses. For niche family businesses or businesses less likely to make outsized returns, alternatives to VC funding may be a better fit. For businesses handling tech or software however, VC funding is often a good option.

The advantages of venture capital:

Substantial Cash Injection

The UK’s most active venture capital investors are continuously fuelling startup growth. UK VCs raised 66 new funds in 2024, worth $10.9b, and are funnelling capital to innovative startups. While it’s hard to raise big sums from angel investment or grants, businesses that are successful in attracting VC funding can get millions to expand their operations.

Plus, although in the current economic climate VCs are increasingly focused on profitability, their appetite for risk remains far greater than other types of investor. At early stage, for example, VCs are often happy to back an idea based on its potential and even before the product is properly tested in the market, helping small businesses to scale fast.

Strategic Guidance

In addition to capital investment, VCs bring their own knowledge and expertise to help you along the process, from business strategy to people management. Often it is this kind of support and the relationship you build that becomes more valuable in the long run.

VCs can also provide network opportunities to aid your development, as getting to know other key industry players will be invaluable as you begin to grow. For example, firstminute capital operates as a fund, but it’s also a community of founders who leverage the network to fuel them to Series A and beyond. Many of its LPs, the investors who contribute capital to the fund, are unicorn founders.

Credibility

Securing VC funding can boost a company’s market credibility and reduces the risk factor there for founders going alone. This credibility provides somewhat of a safety net as it often attracts additional investment, talent, partnerships, and more.

“Venture capital brings funding to the table that is less risk averse and has a longer horizon than other types of investment.”, Rana Yared, Balderton Capital

The disadvantages of venture capital:

Equity Dilution

Securing VC funding often requires giving up a portion of company equity, ultimately leading to diluted ownership. Whilst this dynamic can work well, it can also result in less decision-making power, potentially leading to conflicts over company direction and culture.

Pressure for High Returns

VCs seeking to protect their investment can be demanding, putting on the pressure for quick growth and high-returns. Sometimes short-term gains can sacrifice long-term sustainability, and this kind of misalignment can cause issues between founders and stakeholders, and inevitably the business.

Competition

Whilst venture capital is relatively widely available, it is also in high demand, and the competition is fierce. VCs have a finite amount of capital to invest, and only at a certain time, so many will only fund a handful of the hundreds of pitches they get.

Accessibility

Women raised just 10.5% of total VC investment in 2024, and London-based startups raised 7x more than any other UK region, so there’s still significant progress to be made when it comes to access to VC funding, especially when it comes to backing the most promising women founders.

The Stages of Venture Capital

Startups typically raise multiple rounds of capital, from Seed stage to growth stage and beyond. With each stage comes new risks, new investment amounts, and investors continue to assess businesses at every round, so it’s important to develop a strong fundraising strategy with a clear understanding of your goals.

Learning about the stages of venture capital can help you set these goals, as well as target specific investors who specialise at certain stages, creating a more competitive strategy overall.

As your business progresses through the VC funding stages, it’s essential to maintain a good understanding of your cap table (how much equity each of your investors has in your company). This will ensure you successfully track company shares, manage dilution, and avoid any legal complexities down the line.

“Understanding and navigating legal complexities is a pivotal part of a startup’s journey.” – Tom Bohills, Founders Law

Pre-Seed Funding

Pre-Seed is the earliest stage of business funding, and usually occurs as a business starts to require capital to bring its product to fruition. At this stage, it is relatively unlikely that VCs will provide funding in exchange for equity, so businesses are generally reliant on their own resources or other types of funding to get their product off the ground.

Often, pre-Seed capital comes directly from the founder, their personal network, grants, government funding, or a micro VC fund. An important source of funding at this stage can also come from angel investors, who are often former entrepreneurs themselves and use their own money to invest in new ventures.

Seed Funding

Seed funding gives startups the money they need to build, grow and scale. Startups at seed stage will already have some market traction or validation.

Seed capital is usually provided by angel investors, early-stage VC firms, or other funding methods such as crowdfunding or incubators. At Seed stage, the median company valuation in the UK is $14.8m. Seed rounds are typically risky for investors as startups may have traction without reliable revenue –  the average seed round size ranges from £500k to £2m.

Especially at an early stage, VC investors will typically play an active role in the company and on its board, giving guidance and direction over business decisions and management.

“At a late stage, you have more traction and numbers you can point to. At Seed, it’s more conceptual; it’s about your people, your idea, and your vision for the future.” – Hussein Kanji, Hoxton Ventures

Series A Funding

Businesses reach Series A when they have seen significant market traction and have developed a viable plan for long-term profit. Series A investment typically helps to expand the business and product operations. 

Series A funding is often raised from VCs, and in general the amounts are significantly higher compared to Seed funding rounds. The valuation of a Series A company in the UK tends to be around £10-15m, and the funding amount ranges from around $1-15m.

Series B Funding

Series B funding is for businesses proving a healthy return on previous investments, and a high potential for further growth and profit. Startups use the capital raised to build new products, entering different markets, and generally expanding infrastructure to accelerate growth.

Company valuations at this stage tend to average £30-60m. The median investment raised at Series B in the UK in Q1 2024 was $21m.

At this stage, many promising companies struggle to raise due to the high bar for proof of scalability, revenue, and business model. Our Upscale programme is specifically designed to support founders at this critical post-Series A phase, equipping founders and C-suite teams to overcome the core challenges of growth, from building teams to securing funding.

Series C Funding

If your business is looking to further accelerate growth, you may seek Series C funding. At this later stage, business will have a robust model and notable revenue growth. The additional funding might allow businesses to strengthen resources, expand into new markets, and acquire other businesses to enhance competitive positioning.

This type of funding is usually provided by VC firms, private equity firms, and sometimes corporate investors, and can generate larger sums of money than in previous stages. Median company valuation at this stage is close to $200m, and the average cash raised at Series C in the UK in Q1 2024 was $23m.

Series D+ Funding

If your business is looking to scale globally or prepare for exit opportunities, you may seek Series D+ funding. The additional funding typically enables companies to dominate market segments, pursue major acquisitions, expand internationally, or bridge to an IPO or strategic acquisition.

This type of funding is usually provided by private equity firms, sovereign wealth funds, corporate investors, and late-stage VC firms, and can generate significantly larger sums than earlier rounds. Many companies use Series D+ rounds strategically to optimise their position before going public or being acquired, making this a critical pre-exit funding stage.

Going public via an IPO allows you to raise significant capital by selling your company shares on the stock market, potentially achieving significant liquidity for you and early investors. It provides VC firms with an exit strategy and a way to realise returns on their investments.

“An IPO is a huge moment for any company and offers the opportunity to scale to the next level of growth, but you need to know why you’re doing it.” – Poppy Gustafsson, Darktrace

How Long Does it Take to Raise a Funding Round?

Some companies raise VC funding and scale extremely quickly, and in the last decade we’ve seen an increasing number of unicorn companies, private companies valued at over $1b. In the UK, 10 new unicorns were born in 2024 alone, including Quantinuum, Wayve, and Flo Health – Europe’s first femtech unicorn – and companies are reaching unicorn status faster than ever before. 

UK unicorns founded between 2015-2025 are reaching unicorn status in less than 5 years on average, compared with around 8 years for companies founded in the previous decade.

However, more broadly, the average time it takes a UK startup to go from launch to Series C has nearly doubled to 9.6 years since 2019. With VC funding declining year on year since the boom years of 2021-2022, early-stage startups, in particular, are taking longer to raise funding, with the average time from launch to Seed round increasing from 24 months (2 years) in 2019 to 40 months (3.3 years) today. 

Startups also take more time to raise subsequent rounds. The average period for UK startups to progress from Seed to Series A, as well as from Series A to B, has increased from 18 months (1.5 years) in 2019 to 29 months (2.4 years) today. 

“Shazam took us 18 years from start to finish, so it’s a marathon, not a sprint. You need to keep your energy levels up and be in it for the long haul.” – Dhiraj Mukherjee, Shazam

How to get Venture Capital Funding for Your Startup

With healthy competition for VC money, raising venture capital is a challenge for any startup founder. That’s why, at Tech Nation, we connect startups directly with investors through our startup growth programmes and our investor showcase days. As well as following their top fundraising tips, there are several key steps to take when it comes to getting VC funding for your startup:

Do Your Due Diligence

Speak to similar businesses who’ve been through the VC process, and make sure to research multiple VC firms before making your choice. Each firm will have its own criteria when it comes to industry and ticket size, so find one that matches the ambitions of your business. Once you have found a suitable firm, you can get in touch.

Existing Relationships

It’s a good idea to check if you have contacts (e.g. through an angel investor) that can connect you – get on LinkedIn and see how each firm might be connected to people you know – any foot in the door may facilitate an introduction. If not, be sure to attend events and network as much as possible so that you can introduce your business to prospective investors.

Creating Your Pitch Deck

Once you have a shortlist of VCs, you need to create a pitch deck. To do this you should have a firm idea of logistics such as how much money you need, and how much equity you are prepared to share.

The deck should include information such as what problem your product or service might solve, the market size, your team, strategy, competition, and so on. You also need to be able to prove everything you’re saying, so get tangible examples ready to make your vision truly believable.

“If you’re not sure yet, take less money at Seed to get to a higher proof point, otherwise that technological risk will manifest itself in manufacturing and regulatory risk.” – Harry Destecroix, Science Creates, SCVC

Initial Screening Process

After submitting your pitch deck, VCs might conduct an initial screening to compare your information with their own investment criteria. If there’s interest, you’ll be invited for a first meeting – either virtual or in-person – where you’ll present your pitch and answer questions about your business model, market opportunity, and team. 

If the initial meeting goes well, the VC will begin their due diligence process. This involves a comprehensive review of your business, including financial records, legal documents, customer references, market analysis, and technical assessments. You’ll need to provide detailed documentation and may undergo multiple meetings with different partners and analysts at the firm. This stage can take several weeks to months.

Term Sheet Negotiation

The VC will present a term sheet outlining the key terms of the investment, including valuation, investment amount, board composition, liquidation preferences, and anti-dilution provisions. It’s a non-binding document that serves as the foundation for negotiations between you and the investor before moving to final legal documentation.

Legal Documentation and Closing

After agreeing on terms, lawyers will draft the final investment documents. This includes the purchase agreement and any other relevant contracts. You can review the legalities before signing. Once all documents are executed and conditions are met, the funds are transferred and the investment closes.

Taking the Next Step

Securing venture capital funding for your startup is a transformative journey that requires preparation, persistence, and strategic thinking. While the process can be lengthy and competitive, the potential rewards extend far beyond capital – from invaluable mentorship and industry connections to the credibility that opens doors to future opportunities.

Remember that VC funding isn’t just about finding investors who believe in your vision, but finding partners who can help you navigate the challenges of scaling a business. 

Whether you’re at the pre-seed stage with a groundbreaking idea or preparing for Series A with proven traction, understanding the VC landscape and building genuine relationships with investors will be key to scaling your startup dreams. The journey from pitch deck to funding close may be complex, but for the right business with the right preparation, venture capital can be the catalyst that transforms a promising startup into the next UK unicorn.

For the latest VC investment trends, advice, and a comprehensive overview of the UK tech sector, download The Tech Nation Report 2025.