Funding is the lifeblood of many tech startups. Unless you or a cofounder has sufficient independent funds to get your concept off the ground, you need to rely on external investors.

Over 14,000 tech startups were funded across all funding stages in 2022, down from 20,475 in 2021. Understanding the early stages of funding helps prepare you for attracting investors who are becoming more cautious and more discerning as markets both expand and become more crowded.

Seed Funding Explained

Seed funding is the first funding your tech startup receives from venture capital investors. As your business is in its very early stages, you’d expect this money to come from micro VCs or angel investors with a particular interest in your industry.

The amount of money received here will depend on various factors, but the important thing to remember is that all investors are exchanging funding for equity in your business. They will essentially own a portion of the stock of your company. This is true of all funding rounds, so founders have to assess how much of their business they potentially cede control of in exchange for investment.

Seed funding is used for the initial costs of a tech startup, to bring concepts into reality, and to start branding and marketing strategies that will attract further investment later on.

Series A Funding Explained

When companies can demonstrate some success, profit, or an incredible business plan, they can attract investors in the Series A funding round. Series A funding may come from more established, larger venture capital firms, individual professional investors, and angel investors. Tech startups that can create an amazing pitch deck showing off compelling figures and audience engagement are more likely to get investors to take a risk at this stage.

Series A funding should being in more money than seed funding. Where businesses choose to invest that money is up to them, but common uses for Series A funds include building on growth strategies, marketing, and additional product development.

Read more about Series A, B, and C funding here.

Attracting Investors The Right Way

Investors are always taking a risk when they pump money into unproven startups. You can encourage them to take that risk by:

•          Defining your business goals and vision early

•          Building your brand

•          Seeking investors you know understand your industry

•          Building a network of enthused “fans” and clients that increase brand awareness

•          Investing in proven marketing strategies

Venture capital investment hit some real highs in 2021 but 2022 was a very different picture. Q4 2022 VC investment figures had dropped by 14% from the previous year. While there are still plenty of opportunities for ambitious tech startups, marketing strategies need to be on point to attract investors that will stick around.

Final Word

A great app or platform is always the best start, but you need effective marketing to grow and promote your business. Book a 15-minute introductory call with Arch Collective and let us get you to the next stage of business funding with confidence.

Impress investors with a brilliant brand and drive more revenue in just 10 days. Sign up for our brand messaging framework course here.