Launch Capital
April 2, 2026
The short answer: In a down market, investors take longer, ask harder questions and put more weight on fundamentals. Founders who plan a longer runway, show a clear path to sustainable growth and keep expectations realistic can still raise successfully.
When markets cool, investors become more selective. They tend to focus on evidence rather than potential: customer demand, retention, margins and how efficiently a company turns spending into growth. Valuations often come under pressure, and terms can shift toward more protection for investors.
Decisions also slow down. Investment committees ask for more diligence, and some firms pause new deals while they review their existing portfolios. That is normal, and it is not always a verdict on your company.
The practical effect is that you need more time and more cash cushion. A process that once took weeks may take months, so start earlier than feels necessary. Plan your runway on the assumption that the raise will be slower than hoped.
Your story needs to change too. Growth at any cost is a harder sell. Investors want to see that you understand your unit economics, that you can control spending and that the business can survive if funding takes longer than planned.
Not every investor behaves the same way in a downturn. Funds with fresh capital, family offices and strategic investors may keep investing when others step back, particularly in sectors with durable demand. Existing investors may support a bridge if you show a clear plan. Growth capital providers often look closely at companies that already have revenue and a defined route to profit.
Expect to compromise on something. That might be valuation, size or speed. Decide in advance which trade-offs you can live with, and which you cannot.
Companies raised in tough markets are often built with discipline that helps for years afterward. Keep investors updated, protect your team and avoid raising money you do not need on terms that hurt you later. If you are weighing complex terms, speak to a qualified lawyer and accountant.
Review your spending line by line and decide what you would cut if funding slipped by several months. Talk to existing investors early rather than late, since they often know the market and can make introductions. Build relationships with potential new investors before you need them, even if you are not raising yet. Finally, keep your reporting tidy, because investors who see consistent updates tend to trust you more when conditions are difficult.
Launch Capital is a Toronto venture capital firm and family office that provides growth capital to Canadian technology companies. We are operators who have built and exited companies ourselves. If you are building something real, send us your pitch.
