Raising seed funding is one of the most critical, and often most daunting, milestones for any early-stage startup. It’s the point where a founder must take a promising idea and convince others to believe in it enough to invest. Whether you’re developing a new tech solution, launching a consumer product or building a B2B service, seed capital provides the essential runway to validate your business model, build your team and gain early traction.

But, in a crowded and competitive funding landscape, how can first-time founders stand out?

From crafting a compelling pitch to identifying the right investors, we’re going to explore the key steps and common pitfalls in securing early funding, and give you some valuable insight into how you can improve your chances of success in today’s dynamic startup ecosystem.

 

Difficulties Associated with Raising Seed Funding

 

Raising seed funding is notoriously challenging for early-stage startups, particularly those without prior entrepreneurial experience or established networks. At this stage, startups are often pre-revenue or only just beginning to generate income, making it difficult to demonstrate traction or market validation – two key criteria most investors look for. Founders must convince investors to back an idea that may still be in its infancy, often without a fully developed product or business model.

The competition is also fierce – many startups are vying for a limited pool of seed capital, and investors are naturally cautious about high-risk opportunities. In the UK, regulatory hurdles and complex legal structures around equity can further complicate the process, especially for first-time founders unfamiliar with the fundraising landscape.

Additionally, securing meetings with angel investors or early-stage venture firms often requires warm introductions, putting those outside of tech hubs like London at a disadvantage. All of these factors combine to make seed fundraising a time-consuming and emotionally taxing endeavour.

Why Is It Important for Startups To Raise Seed Funding?

 

Seed funding plays a critical role in transforming a startup from a concept into a viable business. At this early juncture, the capital raised is typically used to build a minimum viable product (MVP), conduct market research, hire initial team members and refine the go-to-market strategy. Without this financial support, many startups would struggle to move beyond the idea stage.

More than just money, seed funding often brings with it strategic guidance and industry connections from investors, which can significantly accelerate growth. It also serves as a vote of confidence – external validation that helps attract future rounds of investment and talent.

In the UK’s increasingly competitive startup ecosystem, early access to capital can be the difference between a company gaining momentum or falling behind. For founders, securing seed funding not only fuels operations but also signals a crucial turning point: the transition from vision to execution.

 

Our Experts

 

  • Andrea Reynolds: CEO and Founder of Swoop Funding
  • Jim Stevenson: CEO of Bletchley Group
  • Michael Baron: Managing Director at BWS
  • Kimberley Waldron: Founder and MD of Started PR
  • Adam Brinn: Regional Head at Growth Lending
  • Vineta Bajaj: Ex-Ocado/Current CFO at Rohlik Group
  • Laurent Descout: CEO and Co-Founder at Neo
  • Leo Labeis: Founder and CEO, REGnosys

 

Andrea Reynolds, CEO and Founder of Swoop Funding

 

 

“Raising seed capital for your startup, regardless of industry, will usually mean a loan or an investor. Start up loans are worth up to £25,000 per Company Director and are the most competitively-priced products on the market and we always recommend that new businesses check whether these are right for them. Alternatively, you might find investors ready to back your vision. From friends and family providing early support to private investors, these connections might bring more than funds: there may also be expertise and networks available to help your new business gain momentum quickly.

We’ve also seen the rise of crowdfunding, enabling you to connect with a ‘crowd’ of supporters through various models – whether it’s reward-based or equity-based.In all cases, you need a solid business plan to showcase your unique idea and growth potential. lenders and investors will be looking for innovation, strong financials and a clear path forward. Be prepared, be specific, and demonstrate why your venture is the next big opportunity.

Businesses that want investors in the UK should know about SEIS – the Seed Enterprise Investment Scheme. This offers incredible tax incentives like 50% income tax relief and capital gains exemption to make your venture incredibly attractive to investors. SEIS significantly de-risks early-stage investment, helping your business find the crucial capital needed for growth across any industry.”

 

Jim Stevenson, CEO and Bletchley Group

 

 

“At seed stage, raising capital isn’t about over-engineered spreadsheets, it’s about building trust and telling a compelling story. Having made the decision to raise capital and assuming you’ve discounted debt, invoice factoring, and other non-dilutive options, start building investor relationships from day one. Use your outreach and engagement to demonstrate momentum, not just chase money.

I advise founders to nail three fundamentals:

1) Narrative, clarify the problem, your solution, and why now.

2) Momentum, show traction or signals of validation, even if pre-revenue.

3) Market fit, prove you understand your audience and how to reach them better than anyone else.

Use your friends and family round as your launchpad, not only to build the business but to set up your next raise. Treat the process like a campaign, with a clear timeline, structured pipeline, and targeted outreach. The ones who succeed are the ones who inspire belief from the first conversation.”

Michael Baron, Managing Director at BWS

“The seed stage is a critical time to raise your capital. You’re hoping that the seed, your capital invested, grows into a fruitful tree. You should have demonstrated in the seed stage that your company product works, and that it is not only viable, but there is a demand for it.

In terms of raising capital in the seed stage, you need interest and investment. Networking and connecting with the right people can move mountains in raising your capital. It’s about quality connections, and your persona, values, and network matter. It’s recommended to rely on multiple financial sources and startup funding in the seed stage.

Often, to reach this stage of the cycle, your investment in the business has come largely from your own funds. Multiple streams for seed-stage companies include your revenue, angel investors, crowdfunding and accelerators. It’s important to lead strategically with long-term intention, in your connections, and choosing backers with integrity – who truly align with your mission and can add value.”

Kimberley Waldron, Founder and MD of Started PR

 

 

“Seed-stage fundraising can define the trajectory of a startup, so founders must approach it strategically. It’s important that you don’t go it alone, instead surrounding yourself with experienced advisors, especially legal counsel who understand term sheets and can help protect your long-term interests. Founders should also understand what investors value: clear upside potential, downside protection, and alignment on vision. Positioning your startup to attract multiple offers increases negotiating power.

Communication is equally important. Strong PR and a clear brand message builds investor confidence, enhances visibility, and differentiates your brand. Messaging should evolve with your stage of growth, focusing on credibility, traction, and long-term value, rather than hype.

It’s also vital to leverage networks and partnerships to amplify reach and access strategic connections. The right angels and investors will offer more than capital – they’ll bring insight, introductions, and shared belief in your mission. Choose them wisely to build a foundation that supports scale and sustains your vision.

To summarise, stick to the 3 keywords for success: Network, Communicate, Personalise.”

Adam Brinn, Regional Head at Growth Lending

 

 

“Seed-stage fundraising is about telling a compelling story with enough evidence to back it up. Investors want to see a clear vision, a sharp understanding of your market, and early signs of momentum – whether that’s a pipeline, strong team, or first customer wins.

Rather than chasing every investor, focus on those with experience in your sector and that can add value beyond the capital. Strategic alignment and genuine buy-in to your growth vision matters just as much as the cash.

Business leaders should also be aware that there are funding options beyond equity, even at earlier stages. Debt products that sit alongside equity such as venture debt can be a smart way of raising additional capital while avoiding further dilution.

Clarity and confidence go a long way in today’s market. Be upfront about your runway, show exactly how the capital will drive growth, and make it easy for investors to say yes.”

Vineta Bajajl, Ex-Ocado/Current CFO at Rohlik Group

 

 

One of the most critical factors for startups raising seed capital is building genuine relationships with investors well before pitching for funds. Seed investors invest in people as much as ideas, so establishing trust and credibility early can make all the difference. This means actively networking in industry events, joining startup accelerators or incubators, and seeking introductions through mutual connections. Use these opportunities to learn what investors care about, get feedback on your concept, and show your passion and commitment over time.

Approaching investors cold with a pitch rarely works. Instead, founders should focus on creating ongoing conversations, demonstrating progress, and being transparent about challenges and how they plan to overcome them. This relationship-building phase also helps tailor your pitch to what specific investors value most, increasing your chances of a successful raise. The trust and rapport built during this phase often turn initial meetings into actual investments.

 

Laurent Descout, CEO and Co-Founder at Neo

 

“In fintech, where competition is fierce, success at the seed stage hinges on solving a real, clearly defined pain point and crafting a compelling narrative around it. Neo launched in 2017 to tackle the FX and cross-border payment inefficiencies that plague corporate treasurers.

Corporates and SMEs relying on traditional banks often face high fees, slow processing through multiple intermediaries, and limited reporting. By offering an integrated treasury solution that reduces costs, accelerates transactions, and enhances visibility, we addressed a critical market gap and secured €12 million in seed funding. For founders, it’s essential to root your pitch in a real-world problem with tangible impact.”

 

Leo Labeis, Founder and CEO, REGnosys

 

 

“When raising seed capital, for us, it was about more than just a compelling product, it was about proving we could tackle a real, urgent problem in a vast market. Regulatory compliance is a major challenge for financial institutions, and our investors saw the strength of our solution, the scale of the opportunity, and the credentials of our founding team.  

Beyond that, mindset mattered. We built REGnosys on four guiding principles: doing what’s right, empowering everyone as a leader, cutting through complexity, and focusing on what we do best.  

For early-stage founders, my advice is to stay laser-focused on your mission, be transparent with investors, and build a culture of integrity and accountability from day one. It’s this combination of product clarity and cultural strength that attracts the right kind of capital and sets you up for long-term success.” 





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