4 Rules of Raising Capital: What Investors Think Healthcare Founders Should Know

Lessons from CQ Summit 2026 and advice for walking into your next fundraise with confidence

For many healthcare entrepreneurs, raising capital is an exciting milestone. It’s a concrete indication that you believe in what you’re building and that you have a solution worth backing. But it also comes with significant pressure.

Investors want to understand what you have built, what the business is proving, where risks remain and, ultimately, why their capital is the right capital to help you reach your next stage.

That makes investor readiness something that happens long before a fundraise does.

At this year’s CQ Summit, CQuence Health convened a panel of experienced investors for an energizing conversation about what founders should know when preparing to raise capital in today’s market. The founders in the room were at different parts of their journey. Some had already raised capital, others were still actively fundraising and others were preparing for their first raise.

The conversation offered a practical look at how investors evaluate opportunities and what founders can do well before a fundraise to put themselves in a stronger position.

Four themes stood out that are worth sharing with any healthcare entrepreneur navigating this unknown terrain.

1. Build Your Traction Narrative Before You Need It

Capital hasn’t disappeared. Investors are being more selective about where they put it.

More than half of venture dollars in 2024 went to AI companies alone, and a handful of massive late-stage deals and IPOs are pulling billions more into fewer, larger bets rather than spreading across a higher volume of smaller ones. The effect on an early-stage founder raising a $6M or $10M round is real, even though the total pool of capital looks fine in aggregate. Investors want to see that the business is moving in the right direction and that the team understands what is driving that progress. This is your traction narrative.

The evidence to support your narrative looks different depending on the company and stage. It could include revenue growth, customer retention, signed contracts, clinical adoption, product milestones or other indicators that demonstrate meaningful movement.

A strong traction narrative connects the dots between milestones rather than presenting them as a collection of wins. It should be short and compelling, which doesn’t equal perfection.

Panelist Alexi Wellman, an investor and entrepreneur, offered investor-ready advice that runs against how most founders behave: waiting to talk to investors until their story is clean. Founders should be able to explain not only what has happened, but why it happened and what they expect next. This includes any perceived failures.

“It's okay to say I pivoted,” said Alexi. “Every startup should die three times to prove it can succeed.”

Traction and fundraising should feed each other. If an investor first hears about your company when you're asking for a check, they’re not getting a full picture. If you've been building relationships and sharing meaningful progress over time, they have an opportunity to see the trajectory.

2. Be Selective and Intentional About Your Investors

Not every dollar is the right dollar.

Understanding the difference between an angel investor, venture capital firm, growth equity investor and private equity firm is only the beginning. Within each category, investors can have very different strategies, check sizes, sector expertise, stage preferences, return expectations and approaches to working with founders.

That means fundraising should not be treated as simply finding someone willing to invest.

Founders should spend time doing their own due diligence to understand who to approach and why that investor could be a good fit for the business.

These are some questions to help you determine if an investor is right for you:

• What companies have they backed?
• What stage do they invest in?
• What healthcare expertise do they bring?
• How involved are they after the investment?

An investment creates a long-term relationship. The right investor can bring more than capital. They can also bring industry connections, operating experience, strategic perspective or credibility with future investors.

One of the most tactical pieces of advice from the day came from Aabed Meer, MD, a healthcare investor, who cautioned founders against mistaking polite interest for a real lead.

His advice: make it easy for investors to give you a clear answer.

“One of the things you can do as a favor for yourself and them is to make it easy to say no,” said Dr. Meer. “If it's a ‘no,’ you would much rather know that today rather than getting to ‘no’ three months from now.”

Knowing where an investor stands allows you to protect your time and keep moving the fundraising process forward.

At the end of the day, the goal isn't simply to find an investor. It's to identify the investors who are genuinely aligned with where you're going and get clarity quickly enough to act on it.

3. Know Your Business Inside and Out

Fundraising exposes the gaps in your understanding of the business.

When growth slows, it can be tempting to point to the most visible problem. For example, if revenue is stalling, your first instinct may be to blame sales.

But the reality is that there are many factors upstream that can impact sales downstream: target market, product positioning, pricing, your ability to communicate value to customers and even the product or solution itself.

Dr. Meer’s advice for this issue is to get clear on the disease before treating the symptoms.

“You might mistake the symptom for the disease...that sales function is often an output of everything else that's happening before. Having clarity around the problem you're trying to solve is key.”

That level of clarity matters because fundraising conversations can quickly expose the difference between a business that is intentionally building toward its next stage and one that is simply trying to extend its runway.

It is inevitable that investors will ask questions that move beyond the headline metric. Founders don't need to have every answer. But this forces you to understand the business well enough to know where the answers are strong, specifically the problem you’re trying to solve, where the risk remains and what you are doing about it.

4. Be Clear About What You Are Raising For

A raise should have a purpose beyond extending the runway.

If a company expects to raise multiple rounds of capital, each round should be tied to a specific stage of development and a set of milestones that meaningfully advance the business.

These are the types of questions you should be asking before you raise:

• What does this capital allow us to accomplish?
• What milestones should be reached with it?
• What will those milestone demonstrate about the business?
• What does reaching them unlock next?

The answer needs to be more specific than “to help us operate for the next 18 months.”

The goal may be to reach a certain level of revenue, complete a clinical milestone, achieve regulatory approval or establish the customer base needed to support the next stage of growth.

The same thinking applies to the type of capital you pursue. Equity isn't the only option, and founders shouldn't necessarily wait until they need money to think about debt.

Panelist Kyle Pearsall, Vice President of Commercial & Healthcare Services Banking at JPMorgan, offered advice for the best time to add non-dilutive debt.

“The best time to get debt is when others are investing in you,” said Kyle. “It's like a home mortgage: the bank wants to lend money to people who don't need money. Show me you can hit one milestone before you get all the money.”

The underlying point is about leverage and timing. Capital is easier to evaluate when you know what you need it to accomplish. Rather than raising the maximum amount available, founders can think deliberately about how much capital is required to reach the next meaningful milestone and what type of financing makes sense for that stage.

This also requires founders to think beyond the current round.

Thinking through that sequence can help founders move forward by raising with a clearer understanding of what the capital is meant to accomplish, rather than raising simply because the company has reached the point where cash is getting tight.

What the Best Raises Have in Common

The common thread across all four lessons is preparation.

Being investor-ready isn’t about having a perfect pitch deck or knowing the answer to every question. It’s about having a clear understanding of your business and being able to communicate that with confidence.

Know your traction. Know your investors. Know your business. And know what the capital needs to accomplish.

Then, when it’s time to raise, you’re not trying to convince someone that your company has potential. You’re showing them the evidence of its progress by demonstrating what you’re building, where you’re going and what the next stage could look like.

Healthcare entrepreneurship will always be demanding. The path from idea to funded company is rarely linear, and the fundraising process has a way of surfacing gaps you didn’t know existed.

Being prepared opens the door to something more than a successful raise. It’s an opportunity to test the business, sharpen your strategy and build the relationships that enable you to positively impact healthcare.

A Partner for Your Raise

At CQuence Health, we work alongside healthcare founders at every stage of growth. We’ve guided companies through the investor-readiness process, whether that’s sharpening a narrative, testing financial models or thinking through a milestone sequence that makes the next raise possible.

If you’re preparing for a raise or want to discuss where your business stands today, we’d love to talk.

Learn how CQuence’s strategic guidance helps healthcare founders build lasting impact: https://www.cquencehealth.com/strategic-guidance