Our mission at Slush is to help founders change the world. To that end, we need to understand the key challenges that founders face. This is what we set out to investigate earlier in the year when we launched our Startup Struggle Survey—a grassroots level research into the most pressing challenges that founders face on their founding journey. With the participation of 1000+ founders and 250+ investors across Europe and the US, this research is one of the largest of its kind. 

Our survey focused on breadth over depth. We were interested in the mundane, everyday difficulties that hinder growth, irrespective of stage, industry, business model, product, or region. This is both the strength and weakness of our report. While we believe that there are certain universal principles that underlie the practice of building generational technology companies, every startup is different—the challenges that become pressing at each moment in time vary according to the profile of the individual company and the surrounding environment. 

This is also the first time we have conducted this research, which means that we have no historical data. We are unable to comment on whether our findings are tied to this specific historical moment, or whether there is something more lasting to our results. We do not know whether fundraising would have been as pressing a challenge for European companies a couple of years ago as it appears to be now, but there is reason to believe so. We do not know whether investors would be less focused on revenue growth if money was not scarce,  but it is likely to be the case. We do not know whether regulation is a more prominent concern for founders now that the EU is racing to become the forerunner in tech regulation, but this is likely to have an influence.

From fundraising and revenue growth to AI and regulation, our survey uncovered beliefs and biases, as well as hidden synergies and misalignments between founders’ and investors’ perspectives on company-building truths and prominent industry trends. Our research is a snapshot of the present, but as such, it can help us focus on what matters to founders at this moment. What became clear is that startups struggle with existential problems. The primary challenges founders identified related to their ability to finance their operations. Each year, Slush brings together thousands of founders and investors, attracting over $3 trillion in assets under management to Helsinki. It’s the largest gathering of venture capital globally, providing the perfect platform for startups looking to secure funding and scale. 

Founders struggle with existential problems—everything else is secondary. In an economic climate where money is scarce, the number one challenge founders identified was fundraising. This is the case across industries. Other common challenges are customer acquisition, scaling, and revenue growth. As companies mature, the difficulty of balancing between growth and profitability enters the equation.

2

Fundraising and revenue growth go hand in hand: in order to raise funding, you need to nail revenue growth. Where founders are focused on fundraising, revenue growth is the most common reason for investors not to invest in a given startup. This is a dynamic that complicates an already challenging fundraising process.

3

Founders do not struggle with user retention or user activation, but converting prospects into paying customers remains challenging. Finding a scalable solution to customer acquisition is difficult as one size does not fit all.

4

Recent developments in AI and machine learning create their own set of struggles to navigate. In particular, investors’ interest in AI seems to frustrate founders who are not building directly in the AI space. While some dismiss AI as a fleeting trend, many acknowledge its potential to transform industries. It is clear that investor attention is warranted—what it means for founders outside the space is a different matter.

5

Investors are more worried about regulation than founders, whose challenges shift depending on sector and business model. Medtech & Pharma face the toughest regulatory hurdles, followed by Social Media, Fintech, Energy, and Biotech. C2C startups face stricter rules than B2B and B2C, especially around market access and competition.

6

Many founders saw remote work as a barrier to productivity. Overall, remote work seems to be a topic that divides opinions. After analyzing the results of several different surveys we have conducted this year, it emerges as one of the most divisive themes with little consensus on best practices among the respondents.

7

Founders are confident in their own ability to realize the full potential of their venture, less confident in their team’s ability, and least confident in their co-founders’ ability. A surprisingly high proportion of founders cite that they would found a company with a different group of people if given the opportunity, and a surprisingly low proportion are genuinely excited about the people they chose to found a company with.

1 – Fundraising is the biggest challenge for founders across industries.

Founders consistently identified fundraising (63%) as their biggest challenge, followed by customer acquisition (50%), scaling and growth (38%), and revenue growth (37%). When asked about their second and third biggest challenges, responses followed the same trend: fundraising, customer acquisition, revenue growth, and scaling & growth were the most frequently mentioned challenges. People and culture-related issues were less of a focus, with peer-to-peer support (2%), talent retention (3%), competition (5%), co-founder relations (5%), and personal motivation (5%) being the least commonly noted challenges.

The results were relatively consistent across industries, suggesting that the challenges founders face are largely industry-agnostic. Customer acquisition took priority over fundraising in Cybersecurity, Education, Enterprise Software, and Travel & Leisure. Scaling and growth were the main challenges in Marketing tech, and revenue growth was the most common concern in Proptech.

There was no significant variation when we looked at the biggest challenge in terms of the founding year, but differences emerged depending on the size of the company. Fundraising remained the primary obstacle for startups with up to 20 employees. For companies with more than 20 employees, revenue growth took the lead. Customer acquisition was the second most pressing challenge for companies with fewer than 10 employees, after which scaling § growth became a more prominent concern. The balance between growth & profitability is a key challenge for companies with 20 to 100 employees.

Founders identified fundraising as their biggest challenge and investors agreed when asked about the challenges their portfolio companies are facing. But in contrast to founders, investors gave more weight to revenue growth—they saw fundraising and revenue growth as almost equally pressing challenges for their portfolio founders, whereas founders themselves were significantly more likely to highlight fundraising as their biggest challenge, with customer acquisition and revenue growth following behind.

Answers varied slightly depending on the investors’ focus stage. Pre-seed and seed investors highlighted fundraising, customer acquisition, and scaling. Series A investors highlighted fundraising, scaling, and customer acquisition. Growth-stage investors stressed fundraising and customer retention as the key challenges their portfolio companies face.

2 – Revenue growth is the biggest challenge that discourages investors from investing.

Investors cited revenue growth as the main challenge that discourages them from investing in a given startup. This is likely to explain why investors tended to highlight revenue growth as a pressing challenge for the portfolio companies in addition to fundraising. Investors are likely to be more attentive to revenue growth as the primary challenge even for those portfolio companies that are struggling to fundraise, given that unsatisfactory revenue growth might hinder their fundraising efforts.

3 – Converting prospects into paying customers remains challenging.

4 –  Investor interest in AI puts pressure on founders.

Investors are optimistic that AI will be a disruptive force, much like the internet in the 1980s. Over 60% of investors saw artificial intelligence and machine learning as the biggest trend shaping the ecosystem. Many seem confident that AI is the catalyst of  a new paradigm shift: “AI will change everything.” It is good to note, though, that the choice set is not equal. Artificial intelligence and machine learning refer to technological developments that can have an impact on for example climate change, regulation, and geopolitical dynamics.

However, some founders worry that the fixation on AI distracts attention away from the core value of their product. When we asked founders what they would need to succeed in their company-building journey, one founder expressed the need for “more early-stage investors who aren’t just caught up in AI hype.” The interest in AI makes fundraising increasingly difficult for companies building outside the AI space: “AI is the number one investment field right now, and if you don’t do AI, it’s hard to raise capital even though you might have good traction.”

5 – Investors are more worried about regulation than founders, whose challenges shift depending on sector and business model.

Investors viewed the impact of regulation to be more significant than founders across every regulatory category—but especially around financial regulations and intellectual property. The gap suggests that founders may not be fully considering the long-term impact of regulatory hurdles, which investors view as critical to future growth. While founders are focused on building products and gaining traction, investors are more concerned about compliance risks—such as data protection, competition, and rising compliance costs—that can potentially slow or disrupt growth. If these regulatory challenges aren’t addressed early, startups risk facing delays, penalties, or unexpected costs, especially as they scale or enter new markets.

6 – Remote work challenges productivity.

Many founders are ready to give up the new normal and return to the office. In fact, some state that the only thing they would need is “being able to put all the team together in a room.” The concern is that remote work has made teams less productive and less collaborative, causing general demotivation. One founder said that “the rise of remote work is destroying company bonds.” Time zones are difficult to manage: “Remote culture is hard, across multiple time zones, for a small team.” Founders are also increasingly worried about remote workers holding multiple jobs at the same time. Someone stated that “everybody wants to work remotely and keep multiple jobs at the expense of productivity” while another person complained about “scam remote work.“

In contrast, our soon-to-be-released research with Gen Z VC shows that Gen Z leaders in the startup ecosystem prioritize flexibility, with many favoring hybrid work that blends in-person interactions with remote options. The research showed that while startups are split between remote and hybrid models, 30% of investors still operate fully in-person, emphasizing face-to-face connections to build a strong team culture. 

Additionally, our upcoming research with Index Ventures which dived into the challenges founders face when scaling teams uncovered even more mixed opinions when it comes to remote work. Many opted for hybrid models where employees would spend at least two or three days per week at the office. Some prioritized teams in the same room for enhanced efficiency. Many acknowledged the benefits of in-person culture but wanted to retain the freedom to hire the best talent from abroad. In summary, this is a heated debate across generations, regions, and industries.

7 – Finding the right co-founder is tricky.

While most founders remain relatively confident in the ability of their co-founders to realize the full potential of their venture, 19% would choose a different co-founder if given the chance. Founders are most confident in their ability to realize the full potential of their venture (80%). But they are also more confident in their team’s ability (71%) than in their co-founders’(66%). This reflects the complexity of finding the right partner, as misalignments in vision, work ethic, or skill set can create friction that is difficult to foresee early on but also critical to long-term success.

Despite all the challenges, founding a company is a passion project and founders would not choose differently. Over 90% of founders feel excited about their ventures and the work they do. Despite struggles with work-life balance—reported by 35%—only 7% would choose a different path. Overworking, financial strain, and constant fundraising pressure are common struggles, but the drive to build something meaningful outweighs the challenges. 92% of the respondents felt like the work they do is meaningful. 80% said that they would not choose differently. For 85%, the motivation to build a company has either increased or remained the same over the past 12 months.