Raising money can be one of the biggest milestones in a startup’s journey. But most founders don’t realize that successful fundraising isn’t one single strategy—it’s a series of phases that require different tactics at each stage.

In a recent Netcapital webinar, Jose Ruiz, Founder and CEO of Space Funding, shared observations and strategies seen across 350+ companies that have collectively raised over $85 million. (Note: Past performance does not guarantee future results.)

The key insight: Strategies often evolve; the tactics used for an initial $100K raise may differ from those required for larger funding targets.

Instead, founders should think about fundraising in three phases.

The Three Phases of Your Capital Raise

The following breakdown represents a hypothetical path observed in many fundraising journeys, though individual results and timelines vary significantly:

Each phase builds on the previous one.

Phase 1: Building Initial Momentum and Community Support

The first $100K can be the hardest money to raise.

Investors want to see early traction. If people who know you best aren’t investing, strangers are less likely to take the first step.

Where your first investors usually come from

Your earliest investors typically come from what Jose calls “Circle Zero.”

This includes:

• Friends and family
  
  
• Former colleagues
  
  
• Existing customers
  
  
• Community members
  
  
• Professional connections
  
  
• Alumni networks
  
  

Founders often utilize email outreach and LinkedIn connection requests to introduce their company. Compliance Note: If your offering is live, all communications must comply with SEC Rule 204. Ensure any public communication includes the required legal legends and direct potential investors to your official offering page.

The Role of Early Traction in the Fundraising Process

Investors follow momentum.

If a potential investor visits your offering page and sees $0 raised, they might hesitate. But if they see $75K or $100K already committed, the psychology changes.

Early traction can signal:

• Trust in the founder
  
  
• Market belief in the company
  
  
• Reduced perceived risk
  
  

Establishing early traction can serve as an important signal and may assist in building confidence for potential future participants.

What Are Micro Angel Investors?

Micro angels are individuals who typically invest $250 to $2,500, though some may invest $5,000 or more.

These investors are often motivated by:

• Supporting founders early
  
  
• Access to new technology
  
  
• Being part of innovative startups
  
  
• Mission-driven investing
  
  

They are an important bridge between your personal network and larger investors.

Where Founders Can Find Micro Angel Investors

If you don’t already have an investor network, you can begin building one in places like:

• LinkedIn founder communities
  
  
• Alumni networks
  
  
• Startup-focused Facebook groups
  
  
• Industry forums
  
  
• Subreddits related to your sector
  
  
• Local entrepreneur groups
  
  

The goal is not to immediately pitch your raise. Instead, focus on building credibility and relationships first.

Common Outreach Methods Used by Founders

Two effective methods are:

Email outreach

Send short, personalized messages introducing your company and asking if they are open to learning more.

LinkedIn connection requests

Include a brief personalized note explaining why you thought they might be interested.

Phase 2: Expanding Outreach Beyond Your Immediate Network

Once your campaign reaches about $100,000, something important changes.

You now have:

• Credibility
  
  
• Proof of traction
  
  
• Early investor validation
  
  

This is where founders can begin scaling their raise like a marketing campaign.

What Is an Ideal Investor Profile?

Before scaling fundraising, founders should identify their Ideal Investor Profile (IIP).

This is similar to identifying your Ideal Customer Profile (ICP).

Ask questions like:

• Who would be most interested in investing in this company?
  
  
• What industries do they follow?
  
  
• What motivates them to invest?
  
  

Examples include:

• Accredited investors interested in AI
  
  
• Climate-focused impact investors
  
  
• Sports fans investing in a club
  
  
• Professionals seeking passive investment opportunities
  
  

Understanding this profile helps determine where to find investors and how to reach them.

Best Channels for Reaching New Investors

Once you know your ideal investor profile, the next step is identifying the channels where they spend time.

Common fundraising channels include:

• Facebook and Instagram ads
  
  
• LinkedIn outreach
  
  
• Google search traffic
  
  
• Founder communities
  
  
• Email newsletters
  
  
• Investor webinars
  
  
• Niche communities
  
  
• PR and storytelling campaigns
  
  

Different industries perform better on different platforms.

For example:

• Tech investors often gather on LinkedIn, Reddit, or Twitter
  
  
• Consumer-focused communities may perform better on Instagram or Facebook
  
  

What Is an Investor Funnel?

An investor funnel guides potential investors from initial awareness to an investment decision.

It typically includes steps like learning about the company, joining an email list, attending a webinar, and eventually investing.

A typical investor funnel may include:

1. Advertising or outreach
   
   
2. Landing page or campaign page
   
   
3. Email capture
   
   
4. Investor education content
   
   
5. Follow-up emails
   
   
6. Retargeting ads
   
   
7. Investment conversion
   
   

The goal is to capture investor data and guide them through the decision process.

Phase 3: Utilizing Data to Refine Outreach Strategy

Once a campaign reaches roughly $500K, founders often have more information about which marketing channels, messaging, and investor audiences are generating the most engagement.

At this point, founders have valuable data about:

• Which channels work best
  
  
• Which messages convert
  
  
• What investors respond to
  
  
• How much it costs to acquire an investor
  
  

This data gives founders additional insight into which outreach strategies and investor audiences are responding to the campaign.

The Key Metrics That Drive Successful Fundraising

Founders should track several key performance indicators (KPIs):

• Cost per lead
  
  
• Cost per investor
  
  
• Average investment size
  
  
• Conversion rates
  
  
• Email-to-investment rate
  
  
• Funnel drop-off rates
  
  

How Much Do Startups Spend?

Many successful campaigns spend 20%-30% of the capital they raise on marketing and investor acquisition.

For example:

• While some successful campaigns may spend 20%-30% of the capital raised on marketing, costs can be significantly higher.
  
  

• Marketing spend is not a guarantee that you will raise $1 million.

The Three Key Takeaways for Founders

If you're planning your capital raise, remember these principles:

1. Start with your community.
Your earliest investors should come from people who already trust you.

2. Treat fundraising like a marketing campaign.
Successful raises rely on data, funnels, and targeted outreach.

3. Use campaign data to guide your strategy.
As your campaign progresses, performance data can help identify which channels and messages are generating the most investor engagement.

FAQ: Planning Your Capital Raise

How long does it take to raise money?

Fundraising timelines vary. While some campaigns may take 18 months or longer, there is no set timeframe or guarantee of reaching a funding goal. Early traction usually builds slowly before accelerating once momentum develops. Please note, there is no guarantee that you will raise $1 million.

How much should startups spend on fundraising marketing?

A common benchmark is 20-30% of the capital raised, though results vary depending on the campaign strategy.

Do founders need a large network to raise money?

Not necessarily. While personal networks help early traction, founders can expand their investor base through communities, outreach, and targeted marketing campaigns.

How Netcapital Helps Founders Raise Capital

Many founders understand the fundraising phases—starting with their network, building momentum, and scaling their outreach—but execution is where many founders struggle.

Running a successful equity crowdfunding campaign requires:

• Investor outreach
  
  
• Campaign marketing
  
  
• Funnel optimization
  
  
• Investor communications
  
  
• Regulatory compliance
  
  

That’s where the right platform can make a significant difference.

Netcapital provides a platform and infrastructure to help founders manage the technical and regulatory aspects of a raise.

A White-Glove Approach to Equity Crowdfunding

Many crowdfunding platforms operate primarily as self-service marketplaces, leaving founders to figure out investor outreach and campaign strategy on their own.

Netcapital takes a more white-glove approach.

Founders working with Netcapital receive guidance on key aspects of a raise, including:

• Preparing their campaign page
  
  
• Developing a fundraising strategy
  
  
• Creating investor communication plans
  
  
• Optimizing outreach and campaign messaging
  
  

This type of support can be especially valuable for first-time founders navigating the fundraising process.

A Cost Structure Designed for Founders

The cost of running a crowdfunding campaign varies widely across platforms.

Many founders are surprised to learn that fees and marketing costs can significantly impact how much capital their company ultimately receives.

Netcapital's fee structure is designed to be competitive, which can help founders retain a larger portion of the capital they raise.

For startups raising capital, this difference can translate into more capital available for product development, hiring, and growth.

With the right support and infrastructure in place, founders can focus on telling their story, building investor relationships, and growing their company.

Interested in raising capital with us?