Pitching venture capital investors in a downturn isn’t impossible – but it’s definitely more challenging. In today’s tighter fundraising climate, valuations have compressed and terms are tougher to come by. Yet at Kruze Consulting, we continue to see our clients close rounds by following proven strategies. Here are 10 critical tips to help your startup stand out and win funding, even when the market is tough.
1. Be Realistic With Valuation Expectations
Sky-high valuations are a thing of the past. Anchor your expectations in current market realities, not the highs of 2021. VCs are passing on pitches that cling to inflated numbers – so ground your ask in real, defensible metrics.
2. Get Existing Investors On Board for Downrounds
If a downround is unavoidable, bring your existing investors into the fold early. Their support helps maintain momentum and credibility during the new raise, especially if a cap table refresh or inside-led round is needed before outside investors will engage.
3. Emphasize Business Model Fundamentals
The basics matter now more than ever. Clearly articulate your business model, show mastery of your unit economics, and have a plan to improve metrics like gross margin or customer acquisition cost (CAC). Demonstrate you can manage burn and make cost-effective decisions, backed with real numbers and tactics.
4. Explain the Economic Impact on Your Market
Make it clear you understand not just your business, but your market within today’s economic context. Discuss customer behavior, budget cuts, and show how your company adapts and solves urgent pain points right now.
5. Show Traction – Or a Smart Go-To-Market Plan
Highlight concrete evidence of product-market fit, customer acquisition, or revenue growth. For earlier-stage startups without traction, share your roadmap to it and the metrics you’ll hit with the new capital.
6. Appeal to VC Contrarian Instincts
VCs love to back great teams in tough times – paint your story as the contrarian opportunity they’ve been looking for. Don’t say it outright, but help them see why investing in you now goes against the crowd, but is the right bet.
7. Highlight Any AI Angle
If your company uses, builds, or benefits from AI, make it central to your pitch. With AI valuations remaining higher than the market average, a credible AI story can get VCs excited and bump your relevance in the stack.
8. Practice Your Pitch on Existing Investors
Use current backers as a feedback loop before going wide. They know your business, can ask tough questions, and will help sharpen your message for new potential VCs.
9. Leverage Prior Downturn Experience
If you or your team have survived and thrived in downturns before, share those stories and the lessons you’re bringing to bear. Invite VCs along as partners to weather this market, rather than preaching at them.
10. Start Pitching Earlier Than Usual
Deals are taking longer and relationships matter more. Build connections 6–9 months before your intended raise, set expectations, and follow through on your operational milestones to show VCs you can deliver in tough conditions.
Resilience and Relationships
Raising funding during a downturn is about more than convincing investors – it’s about building trust through realism, market command, and operational proof. At Kruze Consulting, we see that startups that combine these traits don’t just survive – they thrive. Want more resources? Check out our curated VC pitch deck templates and our startup pitch deck course for hands-on guidance.
With careful planning and these strategies, your startup can navigate the headwinds and land the capital needed to grow – even in tough times.
