Startup Funding: How to Secure Capital for Your Business

Before investors think about valuation or returns, they first think about risk. A company turns an uncertain invention into something investable: a legal structure that can own IP, sign contracts and allocate ownership. This page explains why a company is not bureaucracy, but the foundation of any investment decision.

Inventions often fail not because they are bad ideas, but because they combine multiple layers of uncertainty. The technology may not work outside the lab. The market may not exist yet — or may not value the solution. Regulatory approval may be unclear, slow, or impossible. Investors understand this — and price these stacked risks into how they think about risk, return and portfolio construction.

Many inventors ask how to raise money, but the more important question is how investors actually think. Investors do not evaluate ideas the way researchers do. They think in terms of risk, return, structure and exits. Understanding this mindset early helps you avoid frustration, unrealistic expectations and costly mistakes when you start looking for capital.

When founders think about raising equity, they often focus on how much money they need. What matters just as much is who that money comes from. Different types of equity investors play very different roles in a startup — from early believers who invest their own money to professional funds that expect rapid growth. Understanding these differences helps you choose investors that actually fit your stage and goals.

Raising capital is not just about finding investors who are willing to invest. It is a step-by-step process in which founders prepare their story, decide how much money they really need, and learn what they are willing to give in return. Understanding how fundraising works in practice helps you avoid costly mistakes and enter investor conversations with more confidence.

Raising debt capital involves borrowing money to fund your new business venture. Typically, this borrowed capital originates from a bank, although alternative sources are also possible. It is common for a predetermined portion of the loan to be repaid in regular installments. The repayment amount, often scheduled monthly, is agreed upon and outlined in a contractual agreement. Additionally, interest must be paid for the utilization of the borrowed funds, constituting the interest component of the loan. This aligns with the familiar adage, 'borrowing money costs money.'

Equity financing is a common way to fund a startup when personal savings are no longer sufficient. By bringing in investors in exchange for shares, founders can finance growth without taking on immediate repayment obligations. This overview explains when equity makes sense, how it differs from debt, and how it fits different startup strategies.

Business Angels (also known as angel investors or informal investors) are an important source for financing risky ideas and startups. Especially in the phase of idea development where banks and other parties are not willing to provide capital due to the high risk, this is a group of entrepreneurs who are willing to do so. The classic business angel is a successful entrepreneur who has earned (a lot of) money from selling their business.

A Term Sheet is a document that is commonly used in the world of investors, venture capital, business angels, and private equity firms. It can be considered as a "list of terms". A term sheet almost always precedes the negotiations that should result in the definitive agreement. This latter document is called a participation agreement. It includes the final and definitive terms for an investment.

An Elevator Pitch is a concise presentation of your technology and your future plans and provides you THE moment to capture the investor's interest and opening the door for further discussions. On this page, we delve deeper into how to craft an effective elevator pitch and the essential elements it should include.