As the startup landscape continues to evolve, securing funding has become an increasingly daunting task. We surveyed 50 founders of digital product companies with Product-Market Fit, active in B2B, to gain insight into their perceptions on future funding opportunities.

The Funding Landscape Shifts

When asked about the ease of attracting funding in the next 12-18 months, most respondents agreed that securing investment would become more challenging. They attributed this trend to investors' growing emphasis on risk management and due diligence. Investors will assess risk differently, relying on their unique "secret sauce" for managing risks.

To stand out, startups must demonstrate a solid understanding of key risk domains:

  • Product outlook: sustainable revenue growth opportunities, market size, scalability, and pandemic resilience
  • Team: financial literacy, cash flow management, diversity, and coachability
  • Product robustness: solution architecture, scalability, and vulnerability to increased customer demand
  • Cybersecurity: solution security, compliance, privacy, and value placed on these aspects

Adapting Funding Pitches

We also inquired about founders' willingness to adapt their funding pitches. An overwhelming 54% of startups planned to rephrase their asks to implement growth strategies, capitalizing on market opportunities as others struggle. Other approaches included:

  • Requesting a longer runway (30%) or pivoting the product/service (28%)
  • Considering acquisitions (16%), improving customer satisfaction (6%), or internationalization (4%)

Conclusions and Advice

The findings suggest that securing funding will become more difficult in the near future, but it's not a guarantee of less money available. Instead, investors will focus on better understanding startups' risk profiles.

To succeed, founders must:

  • Develop a deep understanding of their P&L and cash position
  • Improve pricing strategies instead of offering discounts
  • Diversify revenue streams to mitigate the impact of market fluctuations

By recognizing these trends and adapting their funding approaches, startup founders can increase their chances of securing investment in this evolving landscape.