Failure & resilience: why the best founders get it wrong before they get it right

What keeps investors up at night?

At a Cambridge Tech Week fringe event — Meet the Spin-outs, hosted by Chris Ellis, Innovate UK Business Growth Scaleup Director — I found myself sitting a few rows back as Simon Thorpe, former Chair of Cambridge Angels, shared a thought that’s been replaying in my head ever since.

“What keeps me up at night? Underperforming management teams.

I’ve invested in over 60 startups: 16 failures, 12 exits. I always sit down with founders to ask why. The key issue is achieving product–market fit.”

It’s a deceptively simple truth. For all the talk about capital, markets, and timing, the factor that most consistently determines whether a startup survives or stalls is the team’s ability to learn quickly and adapt.

As someone who’s built, broken, and rebuilt multiple companies, one of which I was fortunate enough to exit — I know how brutal that learning curve can be. But I’ve also learned that resilience isn’t about avoiding failure. It’s about recognising it early, owning it, and turning it into progress.

Why failure is rising and what the data shows

Failure isn’t a dirty word in startups. It’s data. And right now, the data suggests early-stage founders are facing tougher odds than they have in a decade.

According to the British Business Bank’s 2025 Small Business Equity Tracker, UK equity deals fell by 15.1% in 2024, down nearly 34% from 2021. Seed-stage activity dropped even faster, at 17.2%, and the number of startups raising equity for the first time has plummeted by 40% since 2021¹.

Those aren't just statistics, they are clear signs of how fragmented the fundraising market has become.

Founders are spending longer chasing capital (the average pre-seed raise now takes 9.5 months) and often burning through time, cash, and morale in the process. At the same time, investors are being more selective. Seventy-two percent now say they’re focusing on fewer, higher-quality deals, and one in three cite “lack of deal quality” as their top challenge.

The result is a perfect storm:

• More founders competing for fewer slots
• More investors demanding proof, not promise
• Longer fundraising cycles with higher emotional and financial tolls

It’s no wonder resilience has become as critical a skill as strategy.

The investor’s lens on failure

Simon’s perspective reflects something I’ve seen time and again at Sowing Capital. When angels talk about “underperforming management teams”, they don’t mean teams that make mistakes — they mean teams that don’t learn fast enough from them.

An investor once told me that his favourite founders were the ones who could describe their failures as case studies, not regrets. Those conversations, the ones where founders are honest about what they tried, why it didn’t work, and what they’d do differently, often lead to second chances.

Because resilience signals coachability. It tells an investor, “I can trust this person to handle the next setback without unravelling.”

In an ecosystem where 60% of startups still fail within three years, that trust is currency.

My own lesson in humility

A few years ago, I co-founded CROSSIP, a non-alcoholic spirits brand that’s now thriving and trading in over 20 countries. But getting there wasn’t smooth. We made a lot of mistakes in the early days and I learned some of the hardest startup lessons first-hand.

We raised money early and scaled too quickly before we’d achieved product–market fit. Like many founders, we were obsessed with showing revenue growth, so we sold to anyone who would buy. On paper, that looked like traction. In reality, it wasn’t sustainable. We ended up with retailers sitting on stock that gathered dust and B2C channels draining thousands in paid ads.

Eventually, we realised where our genuine product–market fit was in hospitality. Bars, restaurants, and venues loved the product, reordered consistently, and became our biggest advocates. That’s when we saw what true fit looks like: retention, repeat business, and customers who genuinely value what you’re offering.

But to get there, we had to eat some humble pie. We cut our operating costs, downsized the team, and raised a discounted round to buy time and course-correct. It was painful, but necessary.

That period taught me the difference between growth and traction. Scaling before PMF doesn’t just burn marketing budget it can burn investor trust. If we’d focused earlier on finding fit, rather than proving scale, we’d have saved time, money, and a few sleepless nights.

The upside is that the lessons stuck. CROSSIP is now stronger than ever, growing globally with a clear focus on the channels that work. And for me, it cemented a belief that’s shaped everything we’re building at ThatRound: moving swiftly, accepting things that break or fail and always gathering data and insights.

How to pivot with purpose

Most founders talk about “the pivot” like it’s a one-time event. In reality, it’s a muscle; the ability to adjust direction without losing momentum.

Here’s what I’ve learned (and seen) about doing it well:

1. Use data, not ego, as your compass. When growth stalls, start with numbers, not narratives. Ask:
   • Are conversion rates improving with iteration?
   • Is your acquisition cost going down?
   • Are customers referring others unprompted?
   • If none of those are trending positively, you’re not iterating — you’re looping.
2. Revisit your product–market assumptions. “Fit” isn’t a static milestone; it shifts as markets, tech, and buyer psychology evolve. Especially in fast-moving sectors like AI, clean energy, and healthtech, where UK VC funding remains concentrated.‍
3. Separate resilience from stubbornness. Persistence keeps you in the game; self-awareness keeps you from betting the company on the wrong hypothesis.

What I see at ThatRound

At ThatRound, we speak to hundreds of founders every quarter. A pattern emerges: many don’t fail because the idea was bad — they fail because the fundraising process became the bottleneck.

They spend six to nine months chasing introductions that go nowhere, never get meaningful feedback, and often don’t know how investors are comparing their startup to others.

That’s what we’re trying to change building infrastructure that makes the market more transparent, efficient, and supportive, so founders can see where they stand and what needs work.

If you can measure your readiness, you can improve it.

If you can compare real options, you can make better decisions.

If you can access the right partners sooner, you can spend more time building instead of begging for calls.

Resilience isn’t mindset — it’s infrastructure

Founders are often told to “be resilient”, but resilience isn’t just about grit. It’s about systems that reduce chaos and help you recover faster.

That’s why I believe resilience and efficiency go hand in hand. When your process is structured, your investor funnel is clear, your data room is ready, and your pitch metrics are benchmarked, you take emotional volatility out of the equation. You can treat rejection as data, not defeat.

In a market this competitive, resilience isn’t about bouncing back. It’s about bouncing forward — faster each time.

Reframing failure for the next chapter

Here’s the paradox I’ve come to appreciate: failure is only final if you stop learning from it.

• Every “no” is a signal. Investors are telling you something, even when they don’t say it directly.
• Every pivot is progress. You’re testing a new hypothesis.
• Every delay is a forcing function. It makes you sharpen your story or tighten your numbers.

So when Simon Thorpe says underperforming teams keep him up at night, he’s not talking about the teams that fail, he’s talking about the ones that didn’t evolve fast enough.

What I’d do next if I were raising today

If you’re in that messy middle, not yet funded, not yet scaling, here’s where I’d start:

• Talk to your customers again. They’ll tell you where the opportunity is hiding.
• Revisit your investor narrative. Make sure your story reflects what’s true now, not what was true six months ago.
• Use transparent tools. Platforms like ThatRound exist to show how you compare, where you’re strong, and where you’re not ready yet.
• Surround yourself with challengers, not just cheerleaders. Feedback is free leverage.

Because the founders who’ll win in this market aren’t necessarily the ones with the best idea, they’re the ones who can turn every setback into a sharper strategy.

Final thoughts

Failure is inevitable. Resilience is optional.

The difference between the two often comes down to what you measure, how fast you learn, and who you’ve got in your corner.

As founders, we don’t get to choose the timing of our failures but we do get to choose how quickly we turn them into data.

That, more than anything, determines whether we’re still standing when the market swings back.

References

1. 1. Small Business Equity Tracker 2025 | British Business Bank/Beauhurst – https://ukbaa.org.uk/policy-and-research/

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