A step-by-step guide for founders to raise capital

The truth is, a lot of the startups undertaking a capital raise don’t meet the minimum investor expectations for their chosen funding pathway.

Rather than reflecting on their readiness or taking responsibility for this, many founders blame investors instead (I wrote an article on it here). But here’s the reality: raising capital is a process, and skipping steps or rushing it often leads to frustration and failure. You as the founder and only you are responsible for this.

Raising capital for your startup is no small feat (I wrote an article on how long it really takes to raise capital). It’s not just about nailing your pitch or building a sleek deck. It’s a structured, multi-step journey that requires strategy, preparation, and patience. Having been part of 160+ capital raises, I can confidently say that

Step 1: Pathway and qualification

This is the foundation of your capital raise. It’s about asking the hard questions—about yourself, your business, and the kind of investors you need—and being brutally honest about whether you’re ready to raise.

Key actions:

Reflections: Reflect on your goals, values, vision and challenges which will guide what path and strategy you take.
Funding and company strategy: Develop a company and funding strategy that aligns with what your reflections.
Market sizing: Critically evaluate your potential market size. Like really put some proper thought and logic into it.
Initial financial forecast: Work out how much capital you need, why you need it, when you need it and how long it will last.
Ideal investor profile (IIP): Determine who your IIP are (I wrote an article on the different types of Aussie startup investors) then understand what criteria makes an irresistible investment in their eyes (traction, opportunity size, team, etc).
Assessing fit: Now, be truthful and realistic—do you currently meet the expectations of your IIP? If not, you need to rethink whether you raise capital right now and possibly more drastically revise your company’s strategy or your company’s existence.
Spotting red flags: Address anything that could undermine investor’s confidence (here are a series of article I wrote on red flags – article 1 and article 2).

Pro Tip: By default, most startups are not VC fundable. It is better to know now than to waste many months or years trying to fit something that isn’t suitable. So, if you think you are VC investible, then really interrogate if that is true or not.

Step 2: Preparation

Once you’ve determined your pathway and if you should be trying to raise capital, it’s time to lay the groundwork. Preparation is where you build the tools and narrative to engage investors effectively.

Key actions:

Develop a compelling narrative: Investors aren’t investing in where you are today—they’re investing in your potential over their investment horizon (for early-stage startups that is 7 – 10+ years. Craft a high-level succinct story that inspires confidence in your vision, ability to execute and opportunity.
Create raise materials including: A teaser pitch deck for warm email intros (to be read by investors in <90 seconds with only one purpose, to book in an initial meeting with you). A detailed investor presentation for meetings (to be presented by you to investors in the initial meeting). A pre-and post-term sheet data room with all key documents. Do some cap table scenario modelling and figure out roughly the terms and structure of your raise. Have Warm intro request templates for leveraging your network (one for each a technical and non-technical investor audience if complex tech/biz).
Know your numbers: Be ready to discuss your forecasts assumptions, usage data etc in granular detail. Confidence in your numbers = credibility.

Pro Tip: Don’t overcook it. “Close enough is good enough”—you’ll hit diminishing returns if you try to perfect everything upfront.

Step 3: Cultivation

Here’s the truth: most investors don’t write cheques after a single meeting (especially at the moment given the state of the current market) but some do! Most, need time to build conviction in your business and trust in you as a founder. Cultivation is about nurturing these relationships before you’re actively raising capital.

Key actions:

Leverage warm introductions: Use your network to secure warm intros. If you don’t have a warm intro then get creative.
Don’t be transactional: Give investors the time and space to get to know you, follow your journey, run their process, and build trust.
Provide consistent updates: Provide monthly or quarterly updates to potential investors. Share wins, lessons, and key milestones.
Be transparent: Challenges are inevitable—investors value founders who are upfront about how they tackle them.
Qualify investors early: Politely but firmly ask questions like: “Are you actively deploying capital from your current fund?” “What’s your typical cheque size?” (I wrote two articles on this topic – article 1 and article 2).

Pro Tip: Cultivation isn’t just about your business—it’s about you. Be coachable, visionary, honest, and reliable. Relationships are the foundation of fundraising.

Want more Aussie founder cap raising content?

Check out some of my other articles on fundraising.

Step 4: Execution

This is where all the hard work pays off. Execution is about running a focused, professional process to open and close your round.

Key actions:

Refresh materials: If some time has passed since you prepared your investor materials, update them to reflect your progress and learnings.
Book investor meetings: Create a concentrated schedule for your investor roadshow. If you’ve done Steps 1–3 well, you’ll have mature relationships and can create competitive tension around your raise.
Run due diligence: Be ready to provide whatever investors need during their diligence process. Speed and organisation matter.
Finalise commitments: Confirm verbal agreements and lock in terms.
Close the round: Negotiate investment documents, execute them, and get the funds in the bank.

Pro Tip: Only launch your raise when you’re confident there’s enough investor interest. Time kills deals—and founders.

Final thought

Raising capital is a marathon, not a sprint. Each step Pathway and Qualification, Preparation, Cultivation, and Execution – builds on the last. Skipping steps might feel like a shortcut, but it’ll cost you in missed opportunities, wasted time, or worse, a failed raise.

Take the time to get it right (but not too much time!). Your future self (and your investors) will thank you.

Warwick Donaldson is the author of the Aussie Startup Capital Nerd and specialises in providing hands-on capital raising support services for Aussie startups CapXcentric.