VC-shaped isn't the same as VC-fundable
Harry Stebbings did some simple maths on stage at Sifted Summit last week, and every early-stage founder should sit with it.
By the time a company exits, a VC fund might own 2–5% of it. Sell for $1bn, and that's perhaps $50m back. On a $400m fund, that doesn't come close to returning the money. So funds like his now need $10bn outcomes, which means companies heading for $1bn in revenue.
The conclusion most people draw is: "Only pitch VCs if you're building something enormous." That's true, but it also isn't the whole story, and it's the part founders most need to hear.
Being VC-shaped is necessary. It isn't sufficient.
I am building a pre-seed startup at the moment. On paper, it ticks the boxes. The product roadmap and revenue streams give it a credible path to very large revenue. We have validated demand, letters of intent for paid pilots and an experienced, backable team.
I still haven't been able to raise a pre-seed round.
I'm not saying that for sympathy. I'm saying it because I hear the same story from founders every week, and the data backs them up. The British Business Bank's latest equity tracker shows seed-stage deals in the UK fell 27% in 2025, and seed companies took longer to raise. Over the same period, growth-stage investment rose 10%. Capital is moving towards larger, later and safer bets.
So the honest position is that being VC-shaped gets you into the conversation, but whether anyone writes a cheque at the earliest stage depends on risk appetite, and in Europe that appetite at pre-seed is thin. It always has been, but it’s now becoming as thin as the air at the top of Everest.
What 11 years of chasing VC taught me
In my first business, we chased VC money for most of our 11 years and never landed it. We built a real company anyway: international expansion, a multi-million-dollar enterprise contract, over £5m in revenue across those 11 years.
If I could give my younger self one piece of advice, it would be to build relationships with angels and family offices first. For most founders, that's the more realistic route to early money. They can back a person and a thesis earlier than most funds are able or willing to.
The second lesson came at the moment we had the most leverage, and didn't use it. When we signed a $3m contract that took us into the US and Thailand, that was the time to raise. We had proof, momentum and a reason to move fast. We didn't, and we stayed more modest than we needed to.
That same contract also brought a risk we should have managed harder. One client went from important to more than 90% of our revenue. That's not just a finance problem because it fundamentally changes who holds the power in every negotiation that follows. We felt that when the pandemic hit and a major contract was cut by a third. It hit revenue that year and our recurring revenue for years afterwards.
The third lesson is about who owns investor relationships. We treated fundraising as the CEO's job. In hindsight, as COO, I should have built my own investor relationships earlier, alongside running operations. Investors back teams, and relationships take years, not weeks. I should have fought harder for my seat at the table and not allowed those relationships to be built and owned only by the CEO. Albeit, that’s a tale for another day.
How to tell which money is right for you
Before spending months on a raise, it's worth answering a few questions honestly:
Could this realistically reach very large revenue within about ten years? Not "could it in theory", but with the market, team and timing you actually have.
Do you need to spend ahead of revenue to win? If speed is the moat, you probably need outside capital. If not, you may have more choice than you think.
Who can say yes at your stage? At pre-seed, that's more often angels, family offices, grants, customers paying for pilots, and your own runway than it is a fund.
What will the raise cost you? Not just equity. Time, focus and energy too. I spent around eight months on my last attempt. That's eight months not spent building.
None of these alternatives is a consolation prize. Plenty of excellent businesses are better off never taking venture money. And some VC-shaped businesses are better off proving more before they ask.
Building patiently
This time, I've chosen to go slower and make it secondary to my advisory and coaching work. Build the product, earn revenue, keep relationships warm and raise when the evidence makes the conversation easier. Time will tell whether that's the right call, but it's a deliberate choice, rather than months of hoping the market changes its mind.
If the VC model now needs decacorns, founders need a clearer view of the other routes, and they need it before they spend a year knocking on doors that were never going to open at their stage.
If you're weighing up whether to raise, and from whom, this is the kind of thinking I work through with founders. Not just how to pitch, but whether this is the right money at the right time.
What's the best early money you've seen a founder raise, and where did it come from?
Source: British Business Bank, Small Business Equity Tracker 2026