The way most startups fail at fundraising

Securing venture capital is often the difference between startup success and failure, yet many founders find investor relationships mysterious and intimidating. The fundraising landscape rewards strategic approaches that combine relationship-building, social proof, and disciplined communication. Whether raising your first round or scaling to Series B, understanding how to effectively approach and connect with investors significantly impacts your fundraising outcomes and ultimately your business trajectory. This article explores effective strategies, proven practices, and common pitfalls to avoid when reaching out to investors and venture capitalists.

EFFECTIVE APPROACHES: The following steps may be helpful for startups to succeed.

Leverage warm introductions: Warm introductions remain the gold standard for VC connections. When someone like Fahim Ahmed from Pathao introduces you to VentureSouq, they transfer trust, instantly establishing credibility. These introductions bypass traditional screening processes that filter out cold outreach. To secure these valuable referrals, map your extended network months before fundraising, identify meaningful connections to target investors, and nurture these relationships by sharing progress updates and providing value. When requesting an introduction, provide a concise, compelling blurb about your company that makes it easy for your connection to forward with their endorsement.

Secure local capital and leverage co-investor networks: Securing investment from local VCs unlocks access to their established co-investor networks. For example, if Anchorless Bangladesh invests in your startup, they've already identified which international VCs (like Shorooq Partners) they work well with on deals in your sector. Directly approach Rahat Ahmed at Anchorless and request: "Beyond your investment, would you introduce us to two to three of your regular co-investors who've partnered with you on similar companies?" This approach is powerful because these aren't cold introductions - they're warm referrals to investors who already trust your local VC's judgment and have established co-investment processes. The implicit endorsement carries significant weight: "We've worked with Anchorless on three previous investments in fintech infrastructure plays, and they've consistently brought us strong opportunities from Bangladesh." These pre-existing relationships dramatically increase response rates and accelerate trust-building, often reducing fundraising timelines by 30-40 per cent.

Attend strategic events with purpose: Unlike the compressed timelines portrayed on Shark Tank, real investor relationships develop through multiple meaningful touchpoints. Industry conferences, accelerator demo days, and investor-focused meetups provide natural contexts for these initial connections. Prepare thoroughly by researching attending investors and identifying three to five high-priority targets rather than attempting to pitch everyone. Structure your approach in three phases: initial conversation focused on their interests and portfolio, a concise elevator pitch only after establishing rapport, and a personalised follow-up within 24 hours that references specific conversation points. This measured approach demonstrates both preparation and respect for the investor's time.

Best practices: Following are some best practices.

Craft a compelling, data-driven narrative: Investors fund stories as much as metrics, but the most compelling narratives combine both elements seamlessly. Develop a clear story that connects your background to the problem you're solving and the market opportunity. The most successful pitches weave quantitative evidence throughout this narrative: "After experiencing the payment challenges in Bangladesh firsthand while running my previous business, I discovered that 78 per cent of urban merchants face the same friction points, representing a $4.3B market opportunity. Our solution has already processed $250K in monthly transactions with 40 per cent month-over-month growth." Practice transitioning fluidly between emotional hooks and data points to create a presentation that engages both analytically and emotionally.

Conduct thorough investor due diligence: The best founder-investor relationships are two-way partnerships that extend far beyond capital. Before pursuing specific investors, thoroughly research their reputation, portfolio support, and behaviour during challenging times. Contact founders in their portfolio, especially those who aren't prominently featured on their website, and ask direct questions: "How did they support you during your last pivot?" "How do they respond when you miss projections?" "What operational support have they provided beyond funding?" This research helps identify investors whose operating style and expertise complement your needs while avoiding those with patterns of predatory terms or abandoning companies during difficult periods.

Practices to avoid: The following practices must be avoided.

Misrepresenting traction or interest: The venture ecosystem is surprisingly small, and investors regu larly compare notes. Exaggerating metrics, fabricating investor interest, or creating false urgency will eventually be discovered and permanently damage your reputation. This type of misrepresentation can lead to being blacklisted across multiple investment firms, as partners frequently discuss potential deals and share information. Instead, honestly communicate your fundraising timeline and any genuine commitments you've received. Transparency builds credibility in a community where reputation is paramount to long-term success.

Treating rejection unprofessionally: Responding defensively to past emails burns bridges permanently. The investor who passes today might lead your next round when circumstances change. Reacting negatively to rejection can damage your reputation within investment networks where professionals frequently change firms and compare notes. Instead, respond graciously, ask for specific feedback, and maintain the relationship through occasional updates. Many successful fundraisers result from rekindled conversations with investors who initially passed but remained impressed with the founder's professionalism and persistence.

Ignoring investment timing and fund dynamics: Even the perfect pitch will fail if delivered to a fund that cannot currently invest. Research when firms last announced new funds (typically with three to five years investment periods) and their recent activity. A firm that has deployed 80 per cent of its capital likely can't make new investments regardless of your company's potential.

Resorting to mass communication tactics: Avoid mass-messaging investors on LinkedIn, as this approach is widely viewed as unprofessional and counterproductive. Instead, focus on targeted outreach with personalised messages that demonstrate you've researched their investment thesis and portfolio. Quality connections consistently outperform quantity in securing meaningful investor relationships.

Final thoughts: Fundraising is a relationship-building marathon, not a transactional sprint. Successful founders approach investor connections with genuine curiosity about the investor's perspective and a clear understanding of how their venture aligns with the investor's thesis. While fundraising can feel distracting, the relationships developed often provide value beyond capital.

Mohidul Alam, investment analyst at VentureSouq, a MENA-based Venture Capital fund, and a 2026 New York University graduate, previously served as an analyst at Antler MENAP, a globally active VC. With experience building and working in startups in Bangladesh, he welcomes fintech pitches at mohid@venturesouq.com