How Startups Scale: Venture Capital & Funding

Today was the first day of half term holidays which gave me a lot of time to work on my startup!

After recently hearing more about venture capital and being introduced to new concepts while reading WIRED’s 100 Hottest Startups, I decided to pause development for a bit and instead research the broader ecosystem around startups to understand the bigger picture of what would make my startup "sellable" in the long run. 

And honestly, I’m astounded by this whole new world I've discovered. Today has opened up an entirely new layer of understanding about what building a company actually involves.

The World of Venture Capital and Startups - What I've learned

Venture capital (VC) exists because high-growth startups are typically too risky for traditional bank loans. However, if one succeeds, the returns can be enormous. That’s why VCs invest in portfolios: most startups fail, so the few that succeed must grow large enough to cover the losses and generate strong returns. For investors, the ultimate outcome is usually an exit - either an acquisition or an IPO (Initial Public Offering) - because that’s when they realise their return.

I also learned how and why funding happens in stages (pre-seed, seed, Series A/B/C). Each round represents a new level of proof: first that you can build something, then that people want it, then that growth is repeatable, and eventually that the company can scale aggressively. As companies progress, fundraising becomes less about vision alone and more about metrics, financial clarity, and demonstrating that new capital will accelerate measurable growth.

A key trade-off is dilution. Raising money typically means issuing new shares, which reduces a founder’s ownership percentage over time. This introduces a strategic decision: owning a large share of a smaller company, or a smaller share of something significantly bigger. I also learned that many startups don’t fail because the idea is bad — they fail because they run out of runway or get stuck between funding rounds. Budgeting, timing, and hitting clear fundable milestones are critical.

Finally, I explored how “exits” aren’t always glamorous billion-dollar mergers. Acquisitions can range from strategic purchases to financial buyouts or even acqui-hires focused primarily on the team. The reality behind them is often far more complex than headlines suggest.

Overall, today shifted my perspective. I've realised how there is so much more to a startup than the product - and how crucial execution, growth strategy, timing, financial discipline, and long-term positioning is.

Videos I Found Valuable

These are the four good videos that helped me understand this world of startups better:

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