Our latest global survey of startups within the AIN network sheds light on some significant hurdles startups face when trying to secure funding. How can they tackle these issues and successfully attract investment in 2025? To thrive, startups must navigate evolving market dynamics, make mental health a priority, and refine their fundraising strategies. Let’s delve into what our research uncovered.
As we approach 2025, there’s an emerging sense of confidence in the investment landscape worldwide. This was a major takeaway from our survey spanning key territories: the USA, UK, and Australia.
This optimism aligns with insights from our investor community, who, in a separate survey earlier this year, indicated a growing interest in supporting more startups. This is a heartening shift, especially after two challenging years marked by high inflation, economic turbulence, and reduced investment activity.
However, it’s crucial to recognize the significantly altered landscape and the uneven performance across the globe. A critical challenge identified in the research was that many startups lack a deep understanding of the fundraising process. Mastering this is essential for survival and success, given how much of a founder’s time is devoted to fundraising efforts.
Life in a startup is inherently dynamic, influenced by factors such as economic conditions, technological progress, and governmental policies. The startups most likely to succeed embody a principle famously attributed to Charles Darwin: survival is about adaptability, not just strength or intelligence.
Let’s explore the main insights from our research and what startups can take away.
- Optimism Amidst Challenges
Despite facing economic headwinds and fundraising difficulties, a sizable proportion of startups in all three countries remain hopeful about their future, though confidence levels do vary.
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Australia: Here, 80% of startups express optimism for the coming year, with nearly half (48%) feeling very optimistic. Despite the economy previously dragging its feet, strong growth is anticipated in the upcoming year.
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US: In the States, 71% of startups feel confident about their future, with 43% very optimistic. Although concerns linger over potential tariff impacts, optimism is buoyed by tax cuts and the appointment of a notable global investor as treasury secretary, which could favor US startups.
- UK: Two-thirds of UK startups (68%) express optimism for the next year. The UK has navigated through storms like Brexit and the COVID recovery. While recent budget changes bumped up National Insurance costs for small businesses, anticipated hikes in Capital Gains Tax and Business Asset Disposal Relief didn’t materialize, offering some relief.
- The Ever-Present Challenge of Fundraising
Securing funding remains a significant hurdle for many startups. The process is often seen as complex and time-consuming, leaving many founders feeling ill-prepared. UK startups have the least understanding, with just 44% feeling confident in their knowledge. This is followed by the US (46%) and Australia (55%).
This knowledge gap is concerning as securing investment is a top priority.
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Australia: 71% of Australian founders cite securing investment as their biggest challenge.
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US: 84% of US startups consider it a top priority.
- UK: 74% of UK startups rank raising investment among their main challenges.
- The Mental Health Toll
Running a startup takes a toll on founders’ mental health significantly.
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Australia: 54% of founders report an impact on their mental health, with 16% experiencing a severe impact.
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US: 59% of founders note mental health effects, with 27% greatly impacted.
- UK: 57% of founders see an impact on their mental health, with 25% feeling it acutely.
Many founders turn to strategies like mindfulness, social networks, and outdoor activities to manage stress.
- Key Factors Driving Investment
In each country, startups that successfully attracted investment demonstrated some common attributes, primarily profitability and scalability.
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Australia: 30% of investors cited profitability as key, with 26% highlighting scalability.
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US: Here, 25% of investors mentioned profitability, and 17% noted scalability.
- UK: In the UK, 24% prioritized profitability, with 18% focused on scalability.
A solid business model and growth potential are clearly crucial for securing investment.
Takeaways for Startups
Build Strong Foundations: Focus on building a robust business model, scalable products, and assembling a talented team. Highlight these strengths in your pitch to investors—it’s the formula that wins them over.
Prioritize Mental Health: Invest in your mental well-being through mindfulness, maintaining social connections, and self-care. Apps like Calm and Headspace can help, and engaging with founder communities can provide valuable support. Remember, you’re not alone.
Educate Yourself on Fundraising: Gain a comprehensive understanding of the fundraising process, forge relationships with investors, and prepare to effectively pitch your business. AIN offers resources in its Learn section, and several notable books from experienced angel investors, such as "Angel Think" and "The Money Train," can provide guidance.
Adapt to Changing Conditions: Remain agile and responsive to market trends and economic shifts. Staying informed about industry changes helps keep you ahead.
By focusing on these key areas, startups can significantly improve their success odds.
Following our research findings, we plan to publish a series of articles tailored to make startups ‘investment ready.’ Check out our Meet The Investor series for insights on winning over investors in today’s changed landscape.
The lesson for 2025 is clear: adapt and prevail.
Interested in investment opportunities? Join us at Angel Investment Network, where global investors meet tomorrow’s outstanding businesses.
