A new survey of US startups has unveiled significant challenges in navigating the complex fundraising landscape. According to research from Angel Investment Network, the world’s largest online angel investment platform, less than half (46%) of US startups said they had a good understanding of the fundraising process.
Meanwhile, 1 in 4 (25%) described their understanding as weak. The lack of understanding is concerning given that securing investment remains a top priority, cited by 84% of respondents. Other key focus areas include hiring talent (18%), work-life balance (15%), and consumer/business confidence (14%).
The survey also highlighted the time-consuming nature of fundraising. A majority of founders (58%) reported that the process took longer than anticipated, and nearly half (49%) found their funds depleted sooner than expected. Despite these hurdles, a significant portion of US startups (71%) remain optimistic about the future, with 43% expressing very high optimism.
For startups who did raise successfully, profitability was the single most important reason investors backed them, according to 25% of respondents, followed by scalability, 17% and then team 15%.
Mental Health Impact on US Founders
The research also reveals the demanding nature of running a startup has taken a toll on the mental health of many founders. A significant 59% of respondents reported that their mental well-being has been impacted, with 27% experiencing a substantial impact.
To cope with these pressures, many founders turn to mindfulness and meditation (42%), discussing challenges with family and friends (29%), and spending time in nature (20%).
Looking ahead to what they will do with funds when raised, US startups prioritise core product development (51%), scaling marketing (38%), and talent acquisition (36%) as they look to grow their businesses.
On the back of the research, AIN is launching a new campaign to enable more startups to be ‘investment ready’ when seeking finance with a new content series aimed at demystifying the fundraising process, based on two decades of experience supporting startups.
According to Mike Lebus, founder of Angel Investment Network:
“The US fundraising landscape for startups has become increasingly challenging. Our survey reveals that many founders are facing longer fundraising periods, cash shortages, and valuation pressures. It’s crucial that US startups enter this process with the best possible knowledge and preparation. Less than half of US founders have a strong understanding of a process that demands expertise. Over the coming months, we will work to address this knowledge gap, offering advice and guidance from experienced investors and successful founders.”
About the survey
The online survey was of 289 US founders in the Angel Investment Network
About Angel Investment Network
Founded in 2004 by childhood friends, James Badgett and Mike Lebus, Angel Investment Network (AIN) is an online platform that connects startups with a global network of angel investors. With 40 networks extending to 90 different countries and nearly 2 million users, it is the largest angel investment community in the world.
Angel Investment Network has supported tens of thousands of founders globally, providing investments that range from £10,000 to £1 million. Its mission remains to help entrepreneurs connect with great investors and achieve their ambitions.