Raising venture capital can feel like navigating a maze, especially as a startup founder trying to figure out what investors want. While every venture capitalist (VC) has their own lens, there are common threads that run through most investment decisions. Understanding these factors can help you present your start up in the best possible light — and just as importantly, decide which investors are right for you.
Whether you’re approaching a UK-based venture capital firm or an international investor, it’s helpful to know what’s happening behind the scenes as they consider whether to back your business.
It starts with a problem
At the heart of any investable start up is a clear, meaningful problem. Venture capitalists want to see that your product or service addresses a genuine need, one that causes enough pain or inefficiency that people are actively looking for a solution. More than just identifying a problem, investors want to know that your solution is innovative and scalable. It should offer a better, faster, or cheaper alternative to what's already available, with the potential to serve a growing number of users over time.
The size of the opportunity
VCs don’t just want to solve problems - they want to solve big problems. Market size plays a major role in investment decisions. A great product in a niche market might make for a solid business, but venture capital requires the potential for exponential growth.
To win investor confidence, founders need to show that their market is both large and accessible. It’s not enough to throw out a huge number. Break your market down logically, demonstrate how many potential customers you can realistically serve, and show that there's real momentum behind the opportunity.
Teams make the difference
While your product might get a VC’s attention, your team is what really holds it. Investors often say they’d rather back an A+ team with a B+ idea than the other way around — and for good reason. Markets shift, and ideas evolve, but a capable, driven founding team can steer a start up through the inevitable ups and downs.
Founders who demonstrate deep knowledge of their market, clarity of purpose, and strong execution skills tend to stand out. If you’ve overcome previous hurdles, or if your team has worked together before, don’t hesitate to highlight it - resilience and chemistry matter.
Traction talks
In the early stages, especially during a seed round, venture capitalists look for evidence that your idea is working. That could be through user sign-ups, early revenue, strong retention, or even pilot programmes with potential customers. You don’t need to have massive numbers, but you do need to show momentum. Investors want to see that people care enough about your product to use it, pay for it, or tell others about it - and that you’re moving in the right direction.
Your business model must make sense
No matter how exciting your technology or idea, VCs will want to understand how you make money or plan to make money. A good business model explains who your customers are, how much they’re willing to pay, and what your costs look like over time.
Founders should be transparent and grounded in their assumptions. Even if your business model is still evolving, showing that you’ve thought about unit economics, margins, and customer acquisition will give investors confidence that your startup has long-term potential.
Standing out from the competition
Every investor will want to know what makes your business defensible. What’s stopping a better-funded competitor from entering your space and doing the same thing? Whether it’s proprietary technology, a strong brand, or a hard-to-replicate community, venture capitalists want to know your edge.
For many UK start ups, this advantage might be access to specific industry insights, regulatory knowledge, or a loyal niche customer base. Whatever it is, define your competitive moat and explain how you plan to widen it.
Investors invest in people
One of the least discussed - but critical - parts of the VC decision-making process is whether the investor actually wants to work with you. Communication skills, honesty, and a willingness to learn go a long way. Most venture capital firms are not just looking to invest - they’re looking to collaborate.
If you can show that you’re coachable, responsive, and open to input (while still confident in your vision), you’ll be more likely to win support. Remember, it’s a relationship that could last several years and like any good relationship, it starts with mutual respect.
Show them the future
VCs are placing bets on where the world is going not just where it is today. They want to see your long-term vision. What does success look like in five or ten years? Where could this business go if everything clicks?
This is where you paint a picture. Help investors imagine your start up as a category leader. Show them how you’ll scale, evolve, and eventually become a business that makes a real dent in the world or a real return for its backers.
Have an exit strategy
While your focus as a founder is often on growth, investors are also thinking ahead to how and when they’ll see a return on their investment. That’s why your pitch deck should briefly outline your exit strategy. This section doesn’t need to be long, but it should show that you’ve considered the bigger picture.
Discuss potential strategies for generating liquidity, such as a future acquisition by a larger player in your industry, a merger, or a public offering (IPO). Highlight any market trends or comparable exits that make these scenarios plausible. If you've already had conversations with potential acquirers or if there’s consolidation activity in your space, this is the place to mention it.
Demonstrating awareness of exit opportunities not only reassures venture capitalists that you're thinking strategically but also shows that you understand their need for long-term returns.
Funding with a purpose
Finally, venture capitalists want to understand what their money will enable. Will it accelerate growth, open new markets, or bring key talent onboard? Start ups that raise with a clear plan tend to stand out from those raising simply to “extend runway.”
Break down how you’ll use the funds and what outcomes you expect from each stage. This not only builds credibility but shows that you’re focused and strategic. Raising venture capital is about more than numbers — it’s about trust, alignment, and shared ambition. As a founder, you’re not just seeking money; you’re choosing partners who will shape the future of your business.
So while it’s vital to understand what venture capitalists want, it’s just as important to ask: Do they align with what I want? The best investor relationships are built on shared values, mutual respect, and a common goal of building something truly impactful.
Copyright 2025. Article was made possible by site supporter Oxford Capital.