Fundraising refers to securing capital from outside sources to finance a business, nonprofit, or project. It’s a strategic effort that helps organizations fuel their growth, deliver impact, or sustain operations—often long before they generate stable revenue.
Why Businesses Raise Funds
Fundraising is about more than just getting money in the bank. It’s about enabling the next phase of progress, building a product, entering a new market, expanding a team, or fulfilling a mission. For startups, it can be a runway-extending lifeline. For nonprofits, it’s core to delivering services and programs. In all cases, it’s a lever for opportunity.
Common Fundraising Approaches
The type of fundraising an organization pursues depends on its model, maturity, and financial goals:
- Equity-Based: Startups and high-growth companies often exchange ownership in return for capital from venture capitalists, angel investors, or accelerators.
- Debt-based: This involves borrowing funds that must be repaid, typically with interest. Think bank loans, lines of credit, or convertible notes.
- Grants & Donations: Mission-driven organizations and nonprofits seek capital through grants, sponsorships, and donor outreach, with no repayment required but high reporting expectations.
- Crowdfunding: A popular option for early-stage products or social ventures, where small contributions from many supporters add up on platforms like Kickstarter or GoFundMe.
- Revenue-Based Financing: A growing alternative where repayments are tied to a percentage of future revenue, offering more flexibility than traditional debt.
What Does Fundraising Involve?
Fundraising typically starts with identifying how much capital is needed, what it will be used for, and who the ideal investors or donors might be. From there, organizations prepare materials like pitch decks, financial projections, and business plans to present to potential backers.
The process involves:
- Targeting the right funding sources based on the business model, stage, and needs
- Building and nurturing investor or donor relationships
- Negotiating terms, whether equity, interest rates, repayment timelines, or grant requirements
- Ensuring compliance, especially when dealing with regulated fundraising or securities
Once capital is secured, it’s deployed according to a defined strategy and tracked to ensure accountability, performance, and alignment with funder expectations.
Key Considerations
- Clarity of Vision: Funders invest in ideas, but more importantly, they invest in clarity, conviction, and the ability to execute. A well-articulated story and plan are essential.
- Investor or Donor Fit: Not all capital is the same. The right partner aligns with your values, understands your space, and supports your long-term goals.
- Terms and Trade-Offs: Every form of fundraising involves trade-offs, whether you’re giving up equity, taking on debt, or reporting to grant providers. Understand the whole picture.
- Sustainability: One round of fundraising should lead to greater financial stability, not dependency. Have a clear plan for ROI or mission-driven impact.
- Legal & Compliance: From equity issuance to donor receipts, fundraising must be handled with regulatory precision to avoid financial or reputational risk.
Whether preparing for your first investor meeting or running a complex multi-source campaign, successful fundraising involves planning, storytelling, and execution. Durity supports founders and financial leaders with the strategy, compliance, and reporting needed to fundraise confidently and clearly.
