The UK has all the key elements startups need to thrive, from sources of capital across stages, a great pool of talent – including second- and third-time CEOs and founders, top academic institutions, experienced advisors and business support services, numerous networking opportunities, and access to blue-chip clients.

London is the only European city among the top 10 most developed global VC ecosystems. It is developing quickly across every metric: total VC deal value and deal count, total VC exit value and exit count, total VC fund value, the number of funds across the lifecycle spectrum and, of course, unicorn count.

The UK ecosystem as a whole is currently the third most valuable in the world, at almost $1 trillion. It is home to thousands of high-potential tech companies that could play a pivotal role in driving future economic growth and better societal outcomes – providing these companies can secure the funding they require to keep scaling.

However, while the UK is the top European destination for venture capital funding, it remains reliant on US VCs to sustain and support its startups. More than one-third of the funding secured by UK startups in Q3 came from US investors. Silicon Valley remains by far the most developed and well capitalised ecosystem. The US venture community continues to demonstrate its financial clout, particularly when compared to Europe. In the first half of 2023, European VCs only managed to raise around €7 billion, leaving full-year capital projections well short of the circa €28 billion raised in 2022.

This question of where the money is coming from is all-important. If the UK ecosystem is going to continue its reliance on US funding, then UK startups need to get wise to the realities of approaching, engaging and convincing US investors, particularly given their distinct approach to investing.

Here are seven key considerations for every UK founder pursuing US investment.

#1 Understand what drives US VCs

Like all investors, US VCs are looking to optimise their returns. However, the VC investment approach can vary across the Atlantic, and US fund managers can differ quite dramatically from their counterparts in the UK (and elsewhere in Europe). Many US VCs are ex-startup founders or have prior experience working at high-growth companies rather than entering the VC industry from a pure financial services background. They know what it takes to run a successful startup and will likely pay more attention to company aspects, such as the founders’ prior experience and the quality of the team.

#2 Demonstrate customer traction in the US

Perhaps the most significant consideration of all, US investors typically prioritise ventures with a foothold in the US market and a well-defined strategy for expanding their presence. Simply having a plan is not sufficient – founders need to demonstrate how they’re already creating traction among customers.

And remember, the US is a vast market, so investors will want to see significant user numbers across multiple US geographies for consumer-focused businesses, or referenceable, prominent enterprise use cases for B2B startups.

#3 Build strong relationships well ahead of time

While many US VCs are actively looking outside of the US for good opportunities, they don’t necessarily have the time or relationships to deep dive into UK domestic industry sectors and proactively approach the best entrepreneurs. The onus is on UK founders to take the lead in identifying and approaching the relevant US VCs that meet their stage, sector, and cheque size requirements, or make sure their UK or European investors already hold such relationships.

VC investing is very much based on relationships and trust. Bigger cheques are not signed overnight, and bigger rounds take longer. Founders can’t just show up and ask for a $50m investment. They need to start building relationships with the right US investors across funding stages continuously to ensure the availability of capital when needed. They need to create optionality ahead of every fundraise – and many UK founders underestimate the amount of groundwork that needs to be laid. Each round's goal must ensure the path to the next round.

#4 Don’t pitch too early

While early engagement is important, UK startups must be cautious not to target US investors prematurely. It’s only at the Series B stage and beyond, as the business scales and the investment landscape becomes more global, that US investors traditionally show interest. Understanding and respecting this timeline can prevent premature and often unfruitful fundraising efforts.

#5 Always be honest about the fundamentals and unit economics

US VCs want the highest possible return and must have confidence in the company’s plan for achieving this. There’s no value in overinflating projections or the market opportunity - it’ll only come back to haunt the founder further down the line. Honesty and transparency are key to building trust among investors, even if the numbers aren’t as strong as founders would like.

#6 Don’t hire an advisor/broker to help raise capital for early stage capital

One of the mistakes early-stage UK startups sometimes make when pursuing funding from US VCs is using advisors or brokers to help raise capital during early stages. This practice is frowned upon in the US, as investors place a high value on the founder/CEO’s ability to identify, approach and raise capital.

If the CEO is unwilling or unable to do that, how will they hire the best talent, find and acquire the best customers, or bring in the next round of capital? For US VCs, using advisors is a tell-tale sign that the current CEO is in the wrong job.

#7 Embrace the US investment opportunity

For all of the UK startup ecosystem’s myriad benefits, the growth capital necessary to fuel founders’ ambitions is far more readily available across the Atlantic.

With its robust financial resources and unique investment approach, the US venture community is an invaluable asset for UK founders aspiring to scale their businesses globally. And with more US VCs setting up satellite offices and sending partners over to the UK to access opportunities, it’s clear that their interest in the UK ecosystem is growing. Indeed, this is backed up by the numbers, which show increased US investment across all stages of the growth journey.

To capitalise on this interest, UK founders must understand and adapt to the nuances of engaging with US investors and take a more proactive, strategic approach to fundraising.