Startup funding is overdue for a refresh

In 2024, more than 5.2 million new business applications were filed in the U.S. That’s millions of people betting on themselves, whether building remote-first companies, launching solo consultancies or bootstrapping SaaS products from their living rooms.

But while it’s easier than ever to launch a business thanks to tools like Carta and AngelList, raising money remains the hardest step. These platforms streamline the mechanics of starting a company and setting up a fundraising infrastructure: managing cap tables, generating legal documents, creating data rooms and even listing opportunities for early investors. They’ve lowered the barrier to getting organized and “fundraising-ready.”

What they can’t do is provide a path to committed capital. Venture dollars are scarce, angel investors are selective and friends and family often can’t write the checks founders need. The hard part isn’t setting up the process, it’s convincing investors to contribute.

What startups need is a source of untapped funds that won’t tie up cash for early supporters. If there was a way for college roommates, former bosses, even parents, to invest in startups without needing spare cash on hand, founders could potentially fasttrack their growth. That’s exactly what IRA-funded startup investing makes possible.

The funding gap most founders face

Many founders face the same issues: limited investor pools, liquidity constraints and endless competition for the same pools of capital. Traditional channels often leave promising startups underfunded. This isn’t due to lack of interest; much of the capital that could back them is sitting in retirement accounts that aren’t easily tapped.

Founders we work with have experienced this firsthand:

• A founder raising a $500k pre-seed might get strong interest from friends and family,  but most don’t have $25k in cash to write a check.
• A startup in a smaller market may have plenty of community support but little access to established angel networks.
• Another founder had early customers who wanted to invest but most of their available capital was in IRAs and 401(k)s, making it difficult to participate without a self-directed option.

With entrepreneurship and interest in startup investing concurrently on the rise, the demand is there for a pipeline from untapped retirement capital to high-potential, underfunded startups.  A clear path to using those dollars can enable founders to start closing the gap between interest and investment.

Why IRA funds are overlooked in startup fundraising

Despite the trillions of dollars Americans hold in IRAs, most investors don’t realize these funds can be directed into private deals through self-directed IRAs (SDIRAs). If retirement capital represents such a large pool of untapped funding, why aren’t more investors using it to back startups? 

According to Alto’s recent research study, the biggest barrier to adoption of SDIRAs isn’t lack of interest, but rather lack of awareness and the perception that alternatives and private markets are too complex to navigate. In fact, while investors are eager for alternatives, nearly 70% aren’t using IRAs to hold them. Among those who aren’t, nearly half say the process feels too confusing or opaque.

It’s evident that investors are hungry for ways to better diversify and back emerging businesses they believe in. In offering a clear path for IRA participation, founders have an opportunity to create a powerful new channel of capital and stronger alignment to investors’ long-term goals.

Unlocking the $17 trillion IRA market with Alto

IRAs represent about 40% of all U.S. retirement assets totaling more than $17 trillion, and until now, that capital has been largely out of reach for private deals.

Alto is changing that. By making it simple for investors to use self-directed IRAs (SDIRAs), Alto has opened the door for founders to tap into retirement wealth that seemed unattainable. Through Alto, founders have raised capital across:

• 3,000 startup deals directly through Alto’s Private Raise Portal, averaging $80,000 per investment
• Nearly 20,000 startup deals when including integrated platforms like AngelList, averaging $16,000 per investment

With 16% year-over-year growth in IRA funded startup raises, what was once considered a niche strategy is quickly becoming a mainstream approach. With Alto, raising from retirement capital is reshaping how startups access funding.

Resource: Why Retirement Capital Works for Private Markets

Why IRA capital works for startup funding

The benefits of using IRA capital for funding startups include:

• Accessing a new capital pool: Investors unlock funds they otherwise can’t use.‍
• Encouraging repeat investments: IRAs are long-term vehicles, allowing investors to reinvest as you grow. At Alto, 70% of 2024 investments came from repeat investors.
• Increasing investor flexibility: Rollover, transfer or cash contribution options make it possible for a diverse range of investors to participate.
• Removing the admin burden: Alto handles setup, funding and compliance support.

Together, these advantages make IRA capital a powerful, sustainable source of funding for startups while simplifying the investor experience on both sides of the transaction.

How to start raising capital with IRA funds

Raising capital from retirement savings is more straightforward than it might sound.

Alto’s Private Raise Portal is designed to be simple and efficient. Our process cuts out much of the lengthy paperwork that has historically plagued private market investing.

Here’s how it works:

• Set up your offering page: No tech integration is required, and many are able to set up their raises in just a few minutes. Our Customer Support team is ready to assist as needed.
• Invite investors: You can share a personalized link with your investors or invite them to invest directly from the platform. They receive a personalized landing page describing your offering and the benefits of backing you using their IRA capital. 
• Track progress in real time: Monitor commitments instantly, with funds often arriving in as little as two business days.

Behind the scenes, Alto takes care of the complexity: investor onboarding, rollovers and transfers, compliance, reporting and direct support, so you can focus on building your business.

For founders, Alto’s Private Raise Portal delivers a turnkey setup, giving you immediate visibility into investor activity as it happens.

Much of the compliance and operational needs are managed on your behalf, and once investments are committed, funds are typically delivered within two business days. This streamlined process keeps your raise moving without unnecessary delays.

For investors, the experience is equally seamless. They receive guided account setup with real-time tracking, support for rollovers, transfers or cash contributions, and ongoing access to Alto’s dedicated investor team. Most importantly, the platform provides them with flexible access to their IRA capital for private market opportunities, helping reduce friction and keeping the process simple from start to finish.

And while the platform is designed to simplify the entire process for both founders and investors, it’s especially powerful in those earliest rounds, where friends and family are often your first backers. With Alto’s Private Raise Portal, they can invest directly from retirement accounts without cashing out. Smaller investments from people in these direct networks can add up quickly, helping you close your round faster.

Turn retirement savings into your startup’s funding advantage

The next big investor in your startup may not come from a VC fund or an angel syndicate; it might come from your neighbor’s IRA. With more than $17 trillion sitting in retirement accounts, this is the largest overlooked funding pool in the market. Alto makes it accessible.

For founders, this means you’re no longer limited to the small circle of angels or the shrinking pipeline of venture dollars. For investors, it means the chance to put retirement dollars to work on the ideas and founders they believe in, while maintaining the tax advantages and long-term alignment of an IRA.

With Alto’s Private Raise Portal, you can open the door to retirement capital, simplify the process for your backers and give your startup a funding advantage that compounds over time.

Start your raise with Alto today and unlock the capital your startup deserves.