Barak Peled on why UK founders chase the wrong capital — and how to find the invisible angels shaping early-stage funding.
When Barak Peled logs on from Cheltenham, he’s upbeat but direct. “I know I sound cynical,” he laughs, “but founders keep wasting months talking to VCs who will never invest.”
Peled, who has worked across Europe, Israel and the US, has seen dozens of UK startups stall not because their ideas were weak, but because their first fundraising strategy was. “At pre-seed, don’t speak to VC funds,” he says. “Don’t book the calls, don’t send the cold emails. None of them invest in cold inbounds. It’s just not how the system works.”
He’s not exaggerating. Across 2024–25, UK equity deals fell 15% year-on-year, with seed-stage activity down roughly 17%¹, yet that figure hides a deeper problem. Most industry reports, including the Small Business Equity Tracker 2025, lump pre-seed and seed rounds together, making it nearly impossible to see how severe the earliest-stage funding gap has become. What’s clear is that funding is still available at seed but far fewer startups are surviving long enough to reach it. Without genuine pre-seed infrastructure — the angels, micro-funds and syndicates willing to fund the first £100k–£250k — founders are fighting uphill in a shrinking pipeline of active capital.
The UK has long been proud of its fintech boom, but Peled believes that early success made the ecosystem complacent. “We had phenomenal success with fintech, and maybe we rested on our laurels,” he says. “AI, cyber, Web3 — those waves happened elsewhere. We didn’t grow the next cohort because we didn’t grow the grassroots funding to support it.”
He points to a simple structural gap: a shortage of real pre-seed capital. Angels remain wary, institutional investors avoid risk, and accelerators can’t fill the gap. “We can’t grow our pre-seed because we don’t have enough angels or proper pre-seed funds. Loads of companies die quietly between idea and seed — not because they weren’t good, but because they ran out of road.”
Data backs this up. The number of UK startups raising equity for the first time dropped 40% since 2021, falling to just 928 in 2024¹. This early-stage bottleneck leaves thousands of potentially high-value ideas stranded before they ever meet institutional capital.
“At pre-seed, don’t speak to VC funds. None of them invest in cold inbounds — it’s just not how the system works.”
– Barak Peled
Founders often mistake visibility for access. In Peled’s experience, VCs are happy to take meetings but rarely write cheques. “Sometimes they entertain a call because they want to understand what’s happening in a space,” he says. “It fills their calendar, but they’re not going to invest.”
That illusion costs founders dearly. According to Carta, the average pre-seed round in the US now takes 9.5 months2 to close, which reflects similar UK fundraising timelines. “If you haven’t got a serious investor meeting within three months, you’re doing something wrong,” Peled warns.
He encourages founders to recognise the psychology at play. “A VC will invest in you if they feel they discovered you, it’s psychology. So be visible in your ecosystem. Go to founder events, post online, talk about what you’re building. Let them find you.”
In other words, build discoverability, not dependency. “Cold outreach isn’t dead, but it’s math,” he adds. “If you email 1,000 angels, you’ll maybe get 10 meetings and one cheque. But there are only 30 pre-seed VCs in the UK. Your odds there? Close to zero.”
While many founders over-focus on VCs, Peled argues that the real capital is hiding in plain sight, within the UK’s network of angel syndicates. “They’re invisible,” he says. “If you Google ‘top angel groups in the UK,’ you’ll find names like 24 Haymarket, Envestors or Oxford Innovation Finance. They’re great for certain sectors, but most either co-invest or offer match-funding rather than true pre-seed capital. The real activity is happening elsewhere, in brilliant local syndicates like Manchester Angels, Angel investors Bristol or Ventures Together. Groups you’d never know about unless someone pointed you in their direction.”
He cites Ventures Together as a case study: “They’ve been going almost ten years and only put their website up last year. Before that it was a Notion page, and they were making two investments a week.”
Peled’s own experience with DR Ventures, the investment and advisory firm he founded in 2021, reinforces that point. “We built DR Ventures to do the opposite of what most early funds do, stay small, close to founders, and make fast decisions,” he says. The firm was founded to back high-conviction founders in deep tech, enterprise SAAS and infrastructure tech, often in collaboration with angel syndicates that never make headlines.
“Speed and access matter more than brand name at this stage,” Peled explains. “We wanted to bridge the reality gap between what early founders need — fast, human decisions — and what the institutional market provides — slow, process-heavy capital.”
That under-the-radar dynamic, he argues, is both the problem and the opportunity - finding the groups and networks where your area of innovation matters, and competition is lower.
📉 UK deal decline: H1 2025 investment down 34% YoY3
⏳ Average pre-seed round: 9.5 months2
💷 EIS funding drop: –20% from 2022 to 2023⁴
📈 Overseas participation: 52% of UK deal value now foreign⁵
There’s a familiar debate about whether UK founders simply lack the “grind” of their US counterparts. Peled disagrees. “It’s not about attitude,” he says. “It’s about conditions.” Over the past five years, the UK has faced a perfect storm of political and economic uncertainty, rising taxes on investors, and a funding shift from fintech to compute and AI, waves the UK has largely missed. “Our infrastructure doesn’t reward early risk,” he adds. “Angels are cautious, the bar for proof is higher, and the public market’s risk appetite has bled into the private one.”
He contrasts it with the US, where pre-seed rounds are often built around networks of conviction rather than institutional validation. “In the States, you see founders raising $500k on a deck and reputation. Here, we want five customers, a prototype, and two years of revenue projections before anyone touches it. It’s backwards.”
Continental Europe is catching up faster, he says, particularly in deep tech. “France and Germany have built consistent state-backed co-investment schemes that de-risk angels and pre-seed funds. The UK needs that kind of backbone again — something between SEIS and institutional capital.”
He sees hope in emerging hubs like Cheltenham, Manchester, and Bristol, but warns that national policy still favours scale-ups over first-time founders. “We talk a lot about innovation, but if we don’t support zero-to-one companies, we won’t have anything to scale.”
That’s borne out by the data: only 35% of UK equity deals now occur outside London and the South East5, widening the regional funding gap.
Peled’s advice to early-stage founders is deceptively simple: stop looking up, and start looking around.
1. Start with your own network
“If you can’t get £10k from someone you know — a lecturer, neighbour, even your dentist — you won’t get £10k from a stranger.”
2. Work your first cheque like a marketing funnel
“The first investor doesn’t want to be the last investor,” he says. “Once you have £10–20k in, it snowballs. That first backer is your proof of belief and they’ll tell others.”
3. Build traction instead of waiting
“If you’ve hit a wall, shift focus to revenue. Even £100 a month proves traction and resets your confidence.”
4. Play the long game with family offices
“They move fast once aligned, but they invest within their wheelhouse. Know the people, not just the portfolio. A family with real estate wealth might love your proptech tool but not your crypto app.”
5. Make yourself discoverable
“You don’t need to chase every VC; just be the company they ‘happen’ to find.”
He adds a final warning: “Raising money is not the same as building a business. The best founders I know switch between the two like gears, fundraising when needed, then cutting it off to execute.”
“Stop looking up, start looking around. Your first £10k won’t come from a VC — it’ll come from someone who knows you.”
– Barak Peled
Barak Peled’s message lands like tough love, but it’s pragmatic. The UK doesn’t lack founders, or innovation, it lacks flow. Until early-stage money moves more freely, success will depend on founders who know how to find the invisible.
Have you had a good or bad experience raising recently?
Leave a verified review of a previous service and get one month’s free access to ThatRound.
LeaVE A REVIEW
