SeedBlink Blog

HubSpot for Startups recently hosted a webinar on “Fundraising 101,” having as guests Eric Bartha - Head of Financial Services at Seedblink and Nilanjay Ghura - Angel Investor & CMO at Nymiz and Startup Wise Guys Angels Network, hosted by Eoin McGuinness, Head of Africa, CEE, & Middle-East at Hubspot for Startups. During this session, the three speakers covered:

• The role of founder expertise and team composition in securing investment.
• Angel investors vs. venture capitalists: Key differences in approach and expectations.
• Common red flags investors look for and how to avoid them.
• How to structure your cap table to remain attractive to future investors.
• Why realistic financial projections matter and how to present them effectively.
• The investor mindset: What VCs and angels really look for in early-stage startups.

Key factors in investment decisions

Securing funding requires startups to demonstrate a compelling market opportunity and a capable team. Investors prioritize companies with a strong foundation of traction, who provide actual demand in the market, and a team that can execute effectively.

At the same time, they assess the founders' expertise and leadership to determine whether the team can successfully scale the business.

Market traction - the strongest indicator

Investors prioritize startups with strong customer interest through revenue growth, user engagement, or early adopters actively using the product. They are looking for founders who demonstrate demand for their product, even when the company might not have revenue yet.

It could include non-paying but engaged users, consistent feedback loops, and clear evidence of market need. A strong product-market fit, reflected in increasing customer adoption and retention, significantly boosts investor confidence.

The role of team and founder expertise

Investors look for founders with relevant industry experience, a clear vision, and a strong execution strategy. A well-rounded team should include expertise in business development, technology, and operations, ensuring all aspects of scaling are covered.

A well-balanced team with a mix of technical, business, and operational expertise is more likely to navigate challenges and scale the company. Additionally, founders who can articulate their vision and demonstrate adaptability in response to investor feedback stand out.

Eric: “The most obvious factor is market traction, which I find a no-brainer for founders who look at a fundraising round. Put your product out there so I can see how the market pulls you in. This will lead to revenue generation, a larger user base, and interest from the market.

_Depending on the stage of the company, there are different definitions, but it comes down to those signs that show there is a need in the market and that there are customers or users who engage with that product. It can be non-paying users, but they have to be very happy with the product. However, of course, revenue is the number one factor._”

Angel investors vs. venture capital

Early-stage startups looking to raise funds have multiple options, but two of the most common funding sources at this incipient stage are angel investors and early-stage VCs.

While both are available to startup founders, they differ significantly in their investment approach, risk tolerance, and involvement in the business. Understanding the distinctions between these types of investors can help startups make the right decisions on their fundraising strategy.

What are angel investors?

Angel investors are individuals who invest their personal money in early-stage startups, typically in exchange for equity. They usually invest smaller amounts, making them suitable for pre-seed and seed-stage companies.

Apart from financial support, angel investors often provide mentorship, industry expertise, and networking opportunities. Unlike VCs, angels tend to have more patience with their investments and focus on long-term growth rather than immediate high returns. Founders seeking strategic guidance and funding often benefit most from angel investors.

Eoin: “I’ve done around 10 angel rounds in the past five years, and the primary focus has always been how can I add value to that startup?

Money is secondary to the value you can bring them in the early stages.”

Raise funds from angel investors and keep your cap table clean > check out SeedBlink’s Raise Hub.

What are VC investors?

Venture capitalists manage pooled funds from institutional investors and high-net-worth individuals. They invest in high-growth startups with scalable business models. VCs typically invest larger amounts and expect a high return on investment within a few years.

Unlike angel investors, VCs operate as professional investment firms that conduct rigorous due diligence before funding startups. They may also provide operational support but primarily focus on financial performance. Because of their structured investment strategy, VCs are best suited for startups with proven traction, clear revenue models, and aggressive scaling plans.

Nilanjay: “Angels and VCs are fundamentally different. The right angel investor—especially one from your industry—can bring real value beyond just capital. If you find an angel with relevant experience and connections, they can help you land customers and accelerate growth.

Venture capital, on the other hand, is a different game. There are early-stage VCs who focus on the team and MVP, and then there are growth-stage VCs who care only about scaling. At the early stage, VCs may provide funding and help with future rounds, but they often lack industry-specific expertise or connections. Unlike some angels, they rarely assist with operations or sales.

That’s why I often recommend founders look for strategic angels in the early days—investors who bring more than just money but also networks, experience, and customer access.”

Red flags that investors hate

Investors evaluate startups based on clear, measurable factors. Certain red flags indicate fundamental problems that reduce a startup’s chances of securing funding.

These issues typically fall into four main categories: team dynamics, equity structure, financial projections, and product-market fit. Addressing these concerns early increases the likelihood of investment.

Poor team dynamics

Investors assess whether a startup’s team can execute its business plan. A common red flag is an unclear division of responsibilities among co-founders, leading to inefficient decision-making. Investors may hesitate if a startup lacks a clear leader.

Eric: “The team is undoubtedly one of the top three most important factors in building a successful company. It’s about more than just industry expertise—it’s about having the right mix of skills to scale a business to the billion-dollar level. A strong founding team should be complementary, covering technical, business, and people skills.

Not every role needs to be filled at the early stage, but there must be a critical mass of key individuals who can drive the company forward. As the company grows, each stage requires new layers of leadership.”

Nilanjay: “Showcasing your team in your pitch deck is always a good idea. The key question to ask is: why did they join the startup?

Early-stage employees aren’t getting industry-standard salaries, so if money isn’t the motivation, what is? Do they believe in the product? Are they driven by the vision? Understanding this can be a huge plus during fundraising and pitch sessions.”

Motivate your key team with equity > start an ESOP today.

Broken cap tables

Equity distribution affects future fundraising potential. Investors look at cap tables to ensure you have not given away too much equity in early rounds, leaving little incentive for key hires and future investors.

Startups that have allocated large percentages to early advisors or departed co-founders may struggle to attract new investors.

Nilanjay: “The thing with red flags is that there’s no universal pattern, but a few stand out. One is having too many co-founders on the cap table without clear decision-making authority.

If four co-founders all look happy on a call, but no one has the final say when tough decisions arise, that’s a challenge.”

Founder defensiveness

Beyond equity, investors also assess the founding team’s decision-making structure and ability to take feedback. A lack of clear leadership among co-founders can be a red flag, as can a defensive attitude when receiving constructive criticism.

Nilanjay: “When founders pitch and receive feedback—especially during demo calls—how they react matters. If they can’t take constructive criticism or get overly defensive, that’s a no-go for me.

I always clarify that I’m not an industry expert, just offering an outside perspective, but if they react negatively, it’s a sign of trouble. I might love the product, but I'll back off if I don’t like the founder’s attitude.”

Unrealistic financial projections

Investors look for realistic revenue projections based on measurable growth patterns. A major red flag is when startups predict exponential revenue growth without a clear plan or clear market signals for achieving it.

If you are fundraising, look for ways to demonstrate how you will reach projected milestones using historical data, customer acquisition costs, and realistic scaling strategies. Overestimating revenue or underestimating expenses can affect potential investors' confidence in you and your company.

Nilanjay: “At the very early stage, we don’t expect a fully fleshed-out long-term financial plan, but we do look for a basic understanding of revenue drivers. What matters is whether you can articulate the assumptions behind your financial projections.

It doesn’t have to map out the next 10 years—frankly, even predicting year one accurately is tough—but your numbers need to make sense.”

Weak product-market fit

Investors avoid startups that cannot demonstrate traction or customer engagement. A lack of paying customers, high churn rates, or an untested market are signs that a startup is not ready for investment.

Investors are unlikely to commit funds if a startup cannot clearly articulate how its product solves a pressing problem.

For more insights, watch the whole HubSpot for Startups webinar on Fundraising 101 here.

Stay connected!

For more insights, check out our Fundraising 101 from SeedBlink, a dedicated learning center designed to help early-stage startups understand the fundraising process. It provides structured resources, including expert insights, step-by-step guides, and best practices on investor relations, financial planning, and funding strategies.

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