At our latest Capital Session, we sat down with startup ecosystem builder Haley “Zap” Zapolski (The Lighthouse), valuation expert Wayne Brown (CLA), and healthcare innovation leader J. Tod Fetherling (HCA Healthcare, America’s Health Network, VITL). Together, they unpacked how early-stage startups can approach valuation with strategy, understand what investors actually care about, and avoid common fundraising mistakes.
Here’s what founders need to know.
1. Early-stage valuation is more art than science
Valuation at the early stage is less about hard numbers and more about how the story of your startup stacks up in the eyes of investors.
It reflects your team, traction, product, and market, along with your ability to communicate your vision.
Instead of focusing too much on a single number, founders should prioritize aligning with the right investors.
That alignment often begins with clarity.
Make sure your narrative, metrics, and growth plan all work together to communicate where you’re going and why it matters.
2. Use non-dilutive capital to build leverage
Before raising equity, consider what you can accomplish with grants, competitions, and pilot funding.
This kind of early momentum can help you refine your product, grow your customer base, and increase your valuation without giving up ownership too soon.
Non-dilutive capital can also signal traction to future investors, reduce your dependency on early outside funding, and show that you can build value efficiently.
3. Fundraising takes longer than you think
Even if you’re prepared and the conversations are going well, raising money can take months.
Investors often move slowly, especially in the early stages, so founders should budget time accordingly and avoid underestimating the emotional and logistical demands of the process.
Plan your milestones around the assumption that they will take longer than expected.
Keep building while you raise, and communicate progress along the way.
4. You need more than a pitch deck
A polished deck is only part of the equation.
Founders also need:
- Clean financials
- Clear runway and burn rate details
- A well-articulated business model
- Reasonable projections
Investors expect clarity and transparency, especially during due diligence.
Be prepared to walk through the numbers, answer tough questions, and back up your assumptions.
The goal is to build confidence, not just impress.
5. Not all capital is good capital
It’s important to be selective.
If an investor doesn’t understand your business, isn’t aligned on terms, or clashes with your values, don’t ignore the red flags.
A bad match can create long-term friction.
Choose partners who add strategic value, not just money.
The wrong investor can slow you down or pull you in a direction that doesn’t fit your vision.
6. Only raise if you have a plan
Don’t raise just because you can.
Know how much you need, what it’s for, and how it moves the business forward.
Taking too much money too early adds pressure without purpose.
Investors want to see thoughtful capital allocation.
A clear plan builds trust and helps ensure that your raise sets you up for meaningful growth instead of just buying time.
7. Capital is a tool, not the end goal
Raising money shouldn’t be the goal.
It’s there to help you build the business you want.
The focus should stay on creating something real and sustainable.
Chasing capital can lead to distractions and pressure that pull focus away from what really matters.
Stay grounded in what helps you deliver value, grow with purpose, and serve the people you built your product for.
Want to join the next Capital Session?
Each month, the NEC hosts open conversations and hands-on workshops focused on investor readiness, financial modeling, and raising capital. NEC members get in free and non-members can attend for $49 per session.
Want to stay in the loop? Sign up for our EC 4-1-1 newsletter or check out our events calendar at ec.co/events!
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