How, when, and where to get funding for your SaaS startup

While you’re growing your SaaS startup, one of the most pressing questions is how to keep the lights on before you hit profitability. In other words, where is the money coming from? 

The quest for funding plays a large role in the mythology of startup life. When we imagine a successful SaaS startup, we might think of a scrappy team of developers raising a round against all of the odds—and then turning that investment into a hefty profit, against greater odds still. 

But, as ever, the reality is often far less straightforward—and less exciting. Pitching to a venture capital (VC) fund is just one of several funding options savvy founders consider. What’s more, many choose to run their businesses on a shoestring budget for as long as possible before seeking external backers. 

This article explains your options when it comes to funding your SaaS startup. How should you go about it? When should you start looking for investment (if at all), and what kind of investment is right for you?

Key insights

• Try growing your SaaS startup as much as you can before raising funds

• Make detailed plans of where you want to go and exactly how you’re going to spend the money you raise

• Study up on the differences between different funding ecosystems, so the overall legal, logistical, and practical process will be smoother

• VC funding is not your only option—familiarize yourself with alternative models

• Account for the substantial amount of time you’ll need to prepare all the documentation and deal with prospective investors

Should you be raising funds?

Raising money means answering to people and losing your independence—or, at the very least, going on a different journey than you originally planned in terms of growth, returns, and expectations. But good investors will guide and prevent you from making mistakes.

So should you be raising, or not?

There’s no definitive ‘yes’ or ‘no’ answer to the dilemma, but a common starting point is looking at what you currently have. 

Scenario A: you have a concept for a minimum viable product (MVP) but can’t develop it without funds.

• You’ve probably passed this stage already, but this is a pretty clear-cut scenario where you do need funding to bring your concept to life. There is plenty you can bootstrap to get ready: produce wireframes and copy to make your idea more tangible, do preliminary market research, build a proper plan to outline what you can and cannot do, and how much market share you could take with funding.

• Remember that with money comes the implicit understanding that you should be spending it, so you need to be prepared to show exactly how you will be allocating funds

Scenario B: You have an MVP and a plan for growing it.

• Grow the business as much as you can on your own: use some version of customer funding (for example, product pre-payments, monetizing the first version of your product, or having a single key customer pay for specific feature development), or bootstrap using your own funds

• How much money you need depends on several factors, including your team size, the cost of running your website/service, and even your revenue model: calculate your runway (cash you have minus cash you spend) to know how long you can operate before you need extra funds

• If you are reaching the limits of how much you can grow independently, take the time to analyze the situation: do you need to refine your team processes (see the chapter on Operations)? Do you have a problem with churning users? Funding will not solve these kinds of growing pains—finding their causes and fixing them will.

Scenario C: You cannot grow further on your own.

• This is the point at which you probably need funding to make your product go further. This places you in a similar position to Scenario A: start making a funding plan, figure out how much money you need to achieve the next milestone or objective, and how much equity you are willing to give up as you go through the process (think around 10% to 20% per round).

Is Venture Capital (VC) funding right for you?

Venture capital is a type of funding that raises money for start-ups that have long-term growth potential. 

VC funding is a lot of work. It might take well over 30+ meetings to find an investor you click with, who’s excited enough about your SaaS startup to consider getting involved. Here are some of the questions you’re going to need to answer during these initial stages:

• Why should they be paying attention to you and your product?

• Who are you competing against?

• Why do you want them specifically as investors?

• What is your concrete growth plan, and how are you going to execute it?

• How much money do you need to realize the plan?

Pro tip: to secure the confidence (and cash) of a VC fund, you’ll need to prove that your SaaS product is gaining market traction. 

An experience intelligence platform like Contentsquare helps you collect evidence that your key performance indicators (KPIs) are on an upward trajectory and your users are enthusiastic—which you can use in pitch decks. 

• Create a custom dashboard to show how your important metrics—such as conversions, revenue, and website visitors—are improving over time. Contentsquare’s Dashboards capability not only lets you record your data, but also turns it into clear visualizations like bar and line charts, which you can use in slide decks.  

• Use Surveys to run a Net Promoter Score® survey—which reveals what percentage of your users would recommend your product to a friend, acquaintance, or colleague. If the results are impressive, you can showcase them as a data visualization. 

• Use Benchmarks to demonstrate your strength against others in your market—this tool shows how your key metrics (such as conversions and traffic) compare to those of your competitors, using anonymized data. If your product is already outperforming similar ones, this tool gives you the numbers to prove it.

Contentsquare’s Benchmarks capability shows how your site or product performs against the competition 

Also remember that VC funding comes with an expectation that you will grow your team and business significantly, and that the investors’ stake will increase 10x in value. There will be specific goals the VC fund monitors to see if you’ve been successful in making your company more valuable and, in turn, allowing them to realize significant gains.

If you haven’t achieved your agreed-upon metrics, you might not be able to raise money again or, at the very least, it won’t be on the terms you're expecting. You could experience what VCs call a ‘flat’ or ‘down round’, meaning you raise at a valuation lower than your previous one.

A few other options: angels, incubators, revenue-based financing 

If you’re at an early stage, a lack of exposure or experience can work against you. Make sure you get proper advice and mentoring when you consider funding (start by going through the resource list at the bottom of the page) and consider angel investors over VCs. Angels are more likely to invest in earlier-stage startups, be personally involved, and introduce you to their extended network. 

Similarly, accelerated programs and incubators (Techstars, Workbench, YCombinator, just to name a few) will provide mentorship and training, and help you build a network fast.

You can also consider an additional model: revenue-based financing, where investors inject capital in the form of a loan that gets paid back over time with a markup. Unlike taking on investors, in an RBF scenario, no equity is given away—once the loan is repaid the business remains entirely in your hands.

Funding ecosystems: Europe vs. the US

US-based VC firms have been around much longer than European ones, and the angel investor system is both quantitatively and qualitatively more established. While top VC funds and angel investors in Europe have been catching up fast, seed rounds (that is, rounds of funding for early-stage, growing companies) in the US are still generally larger, reaching up to 2 or 3 million dollars.

US investors will not be opposed to investment in Europe by default (one famous example is Tim Draper); it helps if you've incorporated in the US before and use the standard Silicon Valley investment boilerplate, as opposed to more localized investment documents. But if you’re a very early-stage European startup looking for funding, the chances of raising money from a US investor are slim. Approach your local or national investor ecosystem instead and look at cities in Europe like London, Berlin, Stockholm, or wherever is nearest to you. Review this list of European (and US) based investors as a starting point.

Another option is to check out Stripe Atlas, an invite-only program that helps international tech companies incorporate in the US, and deals with payment processing after incorporation is successful.

Plan for time—you’ll need it

We cannot stress this enough: no matter which route you go, do not underestimate the amount of work you’ll need to put in when trying to raise funds. It’ll be time-consuming and likely to cause prolonged periods of stress, especially as you inevitably face round after round of re-work and rejection:

Remember that you’ll be kept away from your business at a delicate time as you prepare 1-pagers, pitch decks, investor decks, business plans, and financial projections—and that’s before you even start having actual conversations with potential investors. You also can’t afford to neglect your business while you’re in fundraising mode: any decline in growth will show up in your due diligence, and that might deter investors from investing altogether.

Whilst seeking funding is a long and difficult road, the reward for success is immense. Secure the cash you need to take the business to the next stage, and you’ll have overcome one of the main logistical hurdles to realizing your business dreams. Good luck! 

Blog posts & web pages  

• Techstars - European Investor List

• 1600+ Seed Stage VC Investors in Europe

• SaaS VC funding in 2025: How SaaS founders can meet VC expectations and successfully fundraise, SaaStock 

• Startup Europe Club

• Bootstrap vs VC — The Ultimate Guide For Founders, Jakub Pawelski

• Why Bootstrapping Our Startup Was One of the Best Decisions We Ever Made, Hubstaff

• Startup Pitch Decks, Product Hunt

• You’re Wasting Money on Pitch Decks— From an Investor at a $100 Billion Fund, Daniel Kang

• You’re a SaaS startup looking to raise seed equity from VCs or angels? Read this before you make that call, Christian Thaler-Wolski

Video and audio

• 11 lessons from bootstrapping to $10 million, Lloyed Lobo

• What makes a SaaS founder investable in 2025?, Alex Theuma and Marton Medveczk  

• ​​How to apply and succeed at YCombinator, Dalton Caldwell

• Missive: How a Tiny Team Built a $6M SaaS Without VC Funding, Philippe Lehoux

Books

• Venture Deals, Brad Feld

• The SaaS Playbook: Build a Multimillion-Dollar Startup Without Venture Capital, Rob Walling 

FAQs about startup funding