The Fed’s recent rate cut has sparked headlines about recession risks, but beneath the noise, the U.S. economy is holding stronger than many realize. In this episode of Startup Success, Burkland COO Steve Lord breaks down what’s really happening in the markets, how macro trends ripple into fundraising, and what founders should (and shouldn’t) do when raising capital right now.
Why the Economy Is Stronger Than the Headlines
Despite market jitters, the U.S. economy remains fundamentally healthy. Steve points to equity markets as a forward-looking indicator. While pundits warn of slowdown risks, the S&P has logged one of its longest recent streaks without a single-day drop of more than 1%. That’s not what a collapsing economy looks like. As Steve reminds us, “bull markets climb a wall of worry.”
…the S&P has logged one of its longest recent streaks without a single-day drop of more than 1%.
Businesses are still planning for future demand, unemployment remains steady, and many of the alarmist takes about the economy don’t align with underlying data. On top of that, the dollar is expected to remain weak as the Fed continues its easing cycle. Rather than a crisis signal, a softer dollar actually stimulates growth by making U.S. exports cheaper and more competitive globally.
For founders, the lesson is clear: don’t let headlines dictate your strategy. Focus on the fundamentals driving your business, and pay attention to the real indicators that matter for growth and fundraising. Interest rates and tariffs both take 12–18 months to fully ripple through the economy. The effects of today’s moves won’t be visible until well into next year, meaning founders should plan ahead rather than react to short-term headlines.
Fundraising in 2025: A Tale of Two Markets
With venture activity still sluggish, Steve explains that founders today are navigating “two markets”. Traditional venture funding across most sectors has slowed, with many rounds taking longer to close, valuations tightening, and more than 20% of deals coming in flat or down. The major exception is AI, where capital is flowing freely and valuations remain at a premium. In fact, AI deals have been large enough to skew industry-wide charts.
“Probably the easiest way to sum it up from fifty thousand feet is that it’s really two markets.”
For everyone else, the environment is more cautious. Steve warns founders against panic-driven fundraising moves, like rushing into the market at the last minute. Even companies with excellent metrics, strong teams, and proven traction are seeing fundraising processes stretch to nine months or longer. Entering that process unprepared or too late can put a startup in an impossible position.
Advice for Raising Capital Now
1. Understand Which Market You’re In
Given today’s “two markets,” founders need to calibrate their fundraising strategy to their reality. If your business is AI-driven or can authentically show how AI is being embedded in your product or operations, you’ll find more open doors. Investors are rewarding those stories, often with faster processes and stronger valuations.
For everyone else, capital is harder to come by, which makes discipline and preparation essential. Don’t rely too heavily on vision without hard numbers. The “raise on a pitch deck” era is over. Today’s investors want detailed KPIs, proven economics, and evidence of execution. Forget 40-slide decks heavy on vision statements. Today’s market demands clarity and data. Investors want to see:
- A concise story
- Clear KPIs and traction
- A realistic pathway to growth
Concept and vision still matter, but they must be anchored in numbers and evidence.
2. Start with Your Current Cap Table
Steve recommends starting with your existing investors. They already know your business, have capital at stake, and share your interest in protecting its future. If your current backers aren’t willing to participate in the next round, that’s the first red flag new investors will see. Strong internal support sends a powerful signal of credibility and makes it far easier to bring in fresh capital.
To get there, early and frequent communication is essential. Even if you’re not raising yet, think of your cap table as a future pipeline. Share updates regularly—both the wins and the setbacks—so investors understand where the company is headed and feel invested in the journey. Surprising your investors only when you need money is a recipe for skepticism. By contrast, building trust through transparency creates a base of allies who are more likely to backstop a new round or advocate for you with their networks.
Steve also notes that these conversations can open the door to critical strategic input. Investors often see emerging market signals before founders do, and they can help you test the viability of a pivot or refine your growth plan well ahead of your next raise. The sooner you bring them into that process, the stronger your positioning will be when you formally hit the market.
If your current backers aren’t willing to participate in the next round, that’s the first red flag new investors will see.
3. Know When to Consider a Pivot
In today’s cautious environment, sticking too long with a strategy that isn’t working can be fatal. Steve emphasizes that founders shouldn’t wait until they’re nearly out of cash to rethink direction. If growth is flat or product-market fit hasn’t materialized, start the conversation with your investors early. They’ve often seen similar situations play out and can help guide tough choices. While pivots are never easy, making the move proactively and with investor buy-in can transform fundraising prospects and keep your company positioned for long-term success.
Don’t assume that today’s market won’t fund you. There is record dry powder waiting to be deployed, but investors are being selective. The companies that win capital are the ones that enter the process with a tight, data-driven story and clear evidence of traction.
Know which market you’re in, set expectations accordingly, and build your fundraising plan around timing, transparency, and proof.
Venture Capital Isn’t Broken, it’s Cyclical
Above all, Steve reminds founders not to buy into the hype that venture capital is collapsing. “The venture model is not broken,” he says. “It’s just got macro headwinds on it right now.” History shows this cycle clearly: periods of low interest rates and easy money drive a boom, followed by a pullback as rates rise and capital tightens.
“The venture model is not broken. It’s just got macro headwinds on it right now.”
What would spark the next rebound? Several factors could contribute:
- Rate cuts that stick: If the Fed delivers multiple cuts into next year and inflation stays in check, the cost of capital will fall, and investors will be quicker to deploy.
- Stronger economic signals: Continued job growth, steady consumer demand, and corporate spending plans would reinforce confidence.
- Dry powder release: Venture funds are sitting on record amounts of unallocated capital. Once confidence improves, that capital will flow more freely.
- M&A and IPO activity: A pickup in exits gives VCs liquidity and refreshes their incentive to reinvest.
Steve notes that this ecosystem has always followed the broader economy. Just as we saw in the years after the 2008 financial crisis, today’s downturn is the hangover after a party, but the next upswing is coming.
Prepare now. The companies that build strong fundamentals, communicate openly with investors, and stay alive through the slowdown will be first in line when the rebound arrives.