Fundraising in 2025: A recalibrated playbook for founders and investors

After a period of reset and reckoning, 2025 has brought a shift in sentiment across the startup ecosystem. There's renewed energy in growth-stage deals, select enthusiasm in early-stage rounds, and fresh scrutiny on how and where startups are being built. To decode what’s really happening behind the scenes, Shivani Kulkarni, Vice President at Prime Venture Partners, brings a nuanced view of these shifts drawing from both macro trends and intimate founder interactions.

We unpack her insights to offer founders a deep-dive into what fundraising looks like today, what investors are really looking for, and how underrepresented founders can level the playing field.

A new cycle of opportunity and caution

After a lull, optimism has returned to the venture ecosystem. “Early -stage deals are bouncing back, particularly in sectors like AI and consumer tech,” Shivani shares. Much of this renewed energy comes on the heels of a string of successful IPOs in late 2024 and early 2025, which restored exit confidence and reopened the door for early and growth-stage checks.

But the recovery is not uniform.

“Fintech and B2B marketplaces still face headwinds,” she cautions, citing regulatory hurdles and trade uncertainty. Early-stage funding has picked up, but selectively, favoring founders building in next-gen categories like Consumer AI, Vertical SaaS, and digital-first consumer brands.

The exuberance of earlier funding booms has been replaced by something more grounded. “There’s a valuation reset across the board except in AI, where expectation of disruption is driving aggressive deal-making,” Shivani says.

Yet, the core lens through which investors evaluate startups hasn’t changed. Founders are still assessed based on the strength of their team, the size and potential of the market they’re targeting, the uniqueness and defensibility of their product, and the long-term return potential of the business. These fundamentals continue to guide investment decisions, regardless of changing market conditions.

But a key blindspot many founders have? Misunderstanding the VC’s business model.

“VCs aren’t in the business of funding all good businesses,” Shivani explains. “They are in the business of backing a few that can deliver exponential returns. That’s why alignment matters so much.”

Founders chasing VC capital need to ask themselves: Is my business actually designed for venture-scale growth? If not, there might be better, more aligned sources of funding.

Reframing the narrative for first-time founders

While some founders walk into investor meetings with the advantage of past exits and well-established networks, many are pitching for the first time. That doesn't automatically put them at a disadvantage.

“We don’t expect everyone to be a unicorn whisperer,” Shivani says. “But we do look for signs of deep customer obsession, fast learning curves, and resilience.”

She categorizes founders into two archetypes:

• The 10,000-hour founder – Experienced operators or repeat founders evaluated on their company-building track record.
• The coachable hustler – Early-career founders judged on their agility, self-awareness, and response to feedback.

Execution ability, adaptability, and strategic clarity are more important than pedigree, especially at the seed stage.

Red flags and green lights: What investors watch closely

Even when the idea seems solid and the market promising, certain behaviors raise alarms for investors. One such red flag? “Founders giving up large stakes to non-executive family members or strategic investors early on; it shows poor judgment and can limit future flexibility,” Shivani warns.

On the flip side, what makes investors lean in? “Humility,” she says without pause. “The best founders stay grounded, build culture consciously, and know when to seek help. They make you want to go the extra mile.”

Beyond the metros: A new era for non-metro founders

One of the most powerful shifts in the ecosystem is the rise of high-quality startups from beyond traditional startup hubs.

Shivani points to pitches from Indore and Jaipur that demonstrated a deep, authentic understanding of local problems. “They’re solving real-world challenges with a level of insight and authenticity that’s hard to replicate from a metro,” she says.

However, founders from non-metro regions often lack access to warm introductions or top-tier accelerator programs, which can make breaking into investor networks more challenging. What helps bridge this gap is a strong digital presence, particularly on LinkedIn and within relevant online communities, a clear, credible website that reflects professional branding, and a deliberate approach to network-building. Many successful founders from smaller cities make it a point to travel to startup hubs, build presence via content , and participate in programs or events that increase their visibility and connections.

To truly unlock the next wave of startup innovation, Shivani believes the ecosystem must evolve beyond capital deployment.

“There’s often a cultural disconnect,” she notes. “Founders in Indore or Nagpur may be incredibly strong operationally, but struggle with global GTM strategy or hiring top tech talent.”

Investors must adapt their own expectations and become more hands-on in bridging these gaps, whether that means helping with key hires, demystifying the fundraising process, or opening up customer networks.

Perhaps the most underrated founder skill? Communication. “A founder’s ability to tell a compelling story often determines whether people choose to believe in them,” Shivani asserts.

Whether it’s pitching to VCs, hiring top talent, or winning over enterprise customers, how a founder communicates their vision is directly tied to how far their company can go.

She recalls one of her most memorable pitches; not for its flash, but for its clarity. “It was less of a pitch and more of a masterclass on the payments stack. It changed how I thought about the entire category. That’s the power of storytelling when done right.”

Final word: Patience, trust, and the right kind of capital

At the end of the day, fundraising is just one leg of a founder’s marathon journey. At the early stage, support from investors often includes help with hiring, go-to-market strategy, product feedback, and making key introductions.

Just as important, though, is giving founders the space to make decisions, learn from setbacks, and grow with their business. As Shivani puts it, “Founders live through far more decision points and emotional ups and downs than investors. The best we can do is be a steady presence – offering trust, perspective, and patience.”

In a recalibrated ecosystem, that kind of partnership can make all the difference.

This article is part of an exclusive series presented by YourStory Entrepreneur Hub, powered by Dell Technologies. Views expressed are of the presenter.