Pre-seed fundraising in a tough economy: what UK startups need to know 💡

Raising investment in 2025 feels tougher than ever—investors are cautious, valuations are under pressure, and rounds are taking longer to close.

But there is still plenty of money around and startups are getting funded. Here are 5 strategies to successfully raise pre-seed investment in the current market:

1. Show investors a path to profitability

In a boom, investors chase growth, often ignoring profitability. In a downturn, they prioritise sustainability.
✅ Show how you’ll become revenue-generating sooner.
✅ Highlight a lean, capital-efficient business model.
✅ Have a clear plan for extending your runway—whether through lower burn or alternative funding sources.

💡 Reality check: Startups that have clear cashflow forecasts that they stick to and prove that they can deliver revenue and a path to profitability without constantly fundraising are far more attractive to investors.

2. Be prepared

Investors are more selective and will scrutinise your business more than before.
✅ Expect deeper questions on your market size, financials, and unit economics.
✅ Make sure you own all the IP used in your business and get proper documentation in place.
✅ Secure an advance assurance for SEIS and EIS.

💡 Tip: Investors want to minimise risk—your job is to show them why your startup is a safe bet.

3. Get creative with funding sources

With VC money tighter, explore alternative funding options.
✅ Angel investors – angels will want to see that that you have qualified for SEIS and EIS.
✅ Grants & government schemes – check your eligibility for Innovate UK grants and government loan schemes.
✅ Revenue-based financing – get clients to pay for development – this can extend your runway.

💡 Tip: Don’t rely on one source—target multiple funding strategies to give yourself more flexibility.

4. Nail Your Investor Outreach Strategy

Investors are getting picky—so you need a targeted approach.
✅ Prioritise investors actively investing in your sector.
✅ Build relationships before pitching—cold outreach alone won’t cut it.
✅ Craft a clear, compelling story—investors back conviction and vision.

💡 Reality Check: Raising takes longer in a down market. Start earlier, stay persistent, and don’t run out of cash.

5. Build investor FOMO

Investors still have capital—but they invest when they feel urgency.
✅ Secure a lead investor early to give others confidence. But don’t disclose who they are until you have a term sheet.
✅ Raise in tranches rather than all at once.
✅ Use milestones (e.g., product launch, key hire, big customer) to drive momentum.

💡 Tip: Investors want to back opportunities, not desperation. Position your startup as a winner.

💬 Final Thought

Fundraising is hard and time-consuming—but not impossible. The best founders prepare, adapt, stay strategic, and keep pushing forward even when faced with set backs.

If you’re raising, join our upcoming FREE online event on 13 February at 13:00h“Legal essentials and winning strategies for pre-seed fundraising” for expert insights on navigating this market! 🚀