From Angel to Unicorn: What Investors Really Want to See Before Writing a Check

GSD Venture Studios
May 12
7 min read

By Gary Fowler

Introduction

Every startup dreams of becoming the next unicorn — a private company valued at over $1 billion. But before reaching that coveted status, there’s a gauntlet of fundraising milestones, investor meetings, and pitch decks to conquer. Understanding what investors want at each stage — whether they’re angel investors writing $50k checks or VCs committing millions — is not just helpful; it’s mission-critical. Let’s break down exactly what makes investors reach for their wallets — and what sends them running.

The Startup Funding Journey: From Angel to Unicorn

Funding a startup is a bit like climbing a mountain — each stage gets harder, the stakes get higher, and only the best make it to the top. Here’s the typical journey:

Pre-Seed: Bootstrapped or raised from friends and family. Focused on idea validation.
Seed: Early angel investors come in. Product-market fit is still being tested.
Series A: Venture capital starts here. The company needs traction, a clear business model, and a scalable product.
Series B and Beyond: Growth capital. Scaling the team, expanding to new markets, and optimizing the business.
Unicorn Stage: Huge funding rounds, usually led by mega funds or institutional investors.

Each phase has its own challenges — and investors at each stage have different appetites, expectations, and goals.

What Makes Angels Invest

Angel investors are often the first external backers of a startup. They’re typically high-net-worth individuals who write checks from their own funds. Their reasons for investing vary — some want to support innovation, others are in it for the thrill, and many are former founders themselves.

Here’s what they usually look for:

The Founder’s Grit and Vision: Angels bet on people, not just ideas. A founder who’s passionate, coachable, and resilient can often overcome early-stage challenges.
A Compelling Problem: They want to see startups tackling real, painful problems — especially in markets they understand or have experience in.
Early Validation: A working MVP, a few paying customers, or even a successful pilot program can go a long way in proving there’s demand.

Angels may not ask for a full financial model, but they expect clarity on how you’ll use their money and what milestones you’ll hit.

What VCs Look for in Startups

Venture capitalists are a different breed. They manage other people’s money — usually from LPs like pension funds or university endowments. That means they’re not just looking for “good ideas” — they want big, scalable businesses that can deliver 10x or 100x returns.

Here’s what VCs typically dig into:

Market Size: Is this a billion-dollar market? If not, it’s a tough sell.
Team Strength: Do the founders have complementary skills? Can they attract talent? Do they know the industry?
Product Traction: They want evidence that people want what you’re building — revenue, user growth, retention, etc.
Business Model: Is it scalable? Are there moats? Can margins improve over time?
Exit Potential: They’re thinking about IPOs or acquisitions before they even invest.

Due diligence can take weeks or even months. It involves analyzing financials, legal docs, customer references, and competitor analysis. You have to be ready for that scrutiny.

Traction, Team, and TAM

Investors love alliteration — and these three Ts are non-negotiables:

Traction: Show that the dog eats the dog food. Whether it’s MRR, user growth, waitlists, or NPS — have hard data that proves demand.
Team: Investors bet on jockeys, not horses. A great team can pivot and adapt, even if the initial product flops.
TAM (Total Addressable Market): If you’re solving a niche problem, that’s fine — but show how it can expand. VCs want huge markets because it means big outcomes.

Examples of startups that nailed this include Airbnb, which initially pitched a niche market (couchsurfing-style stays during big events) and later revealed a massive market for short-term rentals globally.

Metrics That Matter at Each Stage

Every stage of funding comes with its own set of metrics that investors typically look for.

At the Pre-Seed stage, startups usually have little to no revenue (around $0–$5K per month) and a burn rate under $20K, with the focus on building an MVP and gathering insights through user interviews.

Seed stage companies often generate $5K–$30K in monthly revenue with a burn rate under $50K, and are expected to show customer acquisition cost (CAC), lifetime value (LTV), and signs of early traction.

By Series A, revenue typically ranges from $30K to $100K+ per month, with a burn rate below $100K; key metrics include retention, growth rate, and unit economics.

Series B companies often hit $100K–$500K in monthly revenue with a higher burn rate, focusing on reducing churn and improving margins.

At Series C and beyond, startups usually exceed $500K in monthly revenue, and the emphasis shifts toward scalability and operational efficiency.

These are general benchmarks — investors still weigh the strength of your team, product, and vision, particularly at earlier stages, even if you don’t meet every metric.

Crafting the Perfect Investor Pitch

A pitch deck isn’t just a slideshow — it’s your foot in the door, your story in visual form, and often your one shot at making a lasting impression. Whether you’re emailing it cold or presenting in person, your pitch needs to be short, sharp, and seductive. Investors get hundreds of decks a month. If yours doesn’t hook them in the first two minutes, it’s game over.

The Must-Have Slides in Your Deck

Here’s what every strong pitch deck should include:

Title Slide — Include your company name, logo, and tagline.
Problem — What real-world pain point are you solving?
Solution — How exactly are you solving it?
Market Opportunity — How big is the market?
Product — Show screenshots, demos, or visuals.
Business Model — How do you make money?
Traction — Key metrics, growth, and validation.
Go-To-Market Strategy — How will you reach your customers?
Competitive Landscape — Who else is in the game, and why are you better?
Team — Who are you, and why are you the right people?
Financials — 12–24 month projections (optional at early stages).
Ask — How much are you raising, and what will you use it for?

Tips to Stand Out:

Use clean, minimalist visuals. No walls of text.
Personalize the pitch if you know who you’re talking to.
Tell a story that moves — start with the “why,” not just the “what.”

Mistakes Founders Make When Pitching

Raising money is as much an art as it is a science. And like any craft, it’s easy to mess up. Investors see countless pitches — so if you commit one of these sins, you’ll get ghosted.

Common Missteps:

Being too vague: “We’re going to revolutionize X industry” is meaningless without specifics.
Over-promising: Unrealistic projections or claiming “no competition” are red flags.
Ignoring weaknesses: Smart investors know every startup has risks. Pretending you’re perfect isn’t reassuring — it’s suspicious.
Not knowing your numbers: If you can’t speak fluently about your CAC, LTV, or churn rate, you’re not ready.
Talking too much: Rambling kills interest. Respect the clock and keep it punchy.

The key is to be confident but coachable. Show you’ve done the work, but that you’re open to feedback. Investors want to help — but only if they feel like you’ll listen.

Building Investor Trust and Credibility

Money follows trust. Before investors back your vision, they have to believe in you. That means more than just charisma — it means proof, consistency, and reputation.

Transparency is Your Superpower

Be upfront about your stage, your gaps, and even your failures. Investors appreciate honesty — it shows self-awareness and maturity.

Storytelling That Sells

Narratives stick. Facts are essential, but stories inspire. Don’t just say your startup helps freelancers get paid faster — paint the picture of a struggling designer who finally got paid on time thanks to your platform. That emotional connection goes a long way.

Leveraging Social Proof

You don’t need to be famous to get funded — but having others vouch for you helps. Social proof signals to investors that others already believe in you.

Here’s how to stack your proof:

Media Coverage — Being featured in TechCrunch, Forbes, or even niche industry blogs adds credibility.
Partnerships — Collaborating with reputable brands or accelerators (like Y Combinator) adds weight to your pitch.
Previous Investors — Mention who’s already backed you. If it’s a well-known angel or fund, it validates your company.
Customer Testimonials — Show that real users are getting real value.

Even a short quote from a user or partner can be powerful when placed right in your deck.

From Check to Champion: What Happens After the Investment

Getting the check is just the beginning. Now comes the real work: building a relationship with your investors that lasts beyond the honeymoon phase. The best founders treat their investors like partners, not just piggy banks.

Keep Them in the Loop

Monthly or Quarterly Updates — Share wins, learnings, KPIs, and challenges.
Ask for Help — Investors can open doors to customers, hires, and future capital.
Set Expectations Early — Be clear about how often you’ll communicate, and stick to it.

Good communication builds trust — and when it’s time to raise again, those same investors are more likely to re-up or help bring others in.

How Startups Become Unicorns

Let’s not sugarcoat it — becoming a unicorn is rare. But for those who make it, the path typically includes:

Relentless Focus on Growth: Blitzscaling, viral growth, aggressive GTM strategies.
Strong Culture: Startups that scale fast need a core team that’s values-aligned and resilient.
Capital Efficiency: While unicorns raise big rounds, they still need smart capital deployment and clear ROI.
Global Vision: Unicorns don’t think local — they think global from day one.

Think of companies like Canva, Notion, or Deel. Each of them had sharp focus, strong teams, and a product that spread like wildfire — plus, they mastered investor storytelling.

Conclusion

Getting investors to write a check is tough — but not impossible. Know your stage, nail your metrics, build a killer story, and be the kind of founder people want to back. From angels to unicorns, the path may be winding, but with the right map and mindset, you can navigate it like a pro.

FAQs

What’s the difference between angels and VCs?

Angels invest their own money, often at earlier stages. VCs manage funds from other investors and usually come in later, with bigger checks and more structure.

Do I need traction before talking to investors?

Yes, especially if you’re raising from VCs. Angels might invest pre-traction, but the more proof you have, the better.

How long does it take to raise funding?

It can take 3–6 months or more. Start early, build relationships, and don’t wait until you’re out of cash.

What makes an investor say yes?

A clear problem, strong team, market opportunity, early traction, and a believable story. It’s not just numbers — it’s conviction.

How can I increase my chances of getting funded?

Build a great product, grow your user base, tell a compelling story, and network like your future depends on it — because it does.