Fixing the Broken Fundraising Ecosystem: Why We’re Failing Founders

In a recent blog, I highlighted a harsh truth: 90% of investment applications are rejected, wasting vast amounts of founders’ time, effort, and resources by applying before they’re truly investment-ready.

This reality hit home again when I recently attended a pitch event hosted by a VC firm. Out of 10,000 applications, just 250 were shortlisted. Only 10 were invited to pitch. That means 9,990 founders walked away with nothing — another stark example of a broken fundraising ecosystem.

Founders aren’t failing. They’re being failed.

The problem? Investment has become the loudest voice in the startup world. It’s treated as the default goal and the default starting point — pitch first, ask questions later. Instead of checking fundability, founders send pitch decks blindly convinced they're building “the best thing since sliced bread.”

Investors, meanwhile, are inundated with thousands of low-quality applications — wasting their time and money too. And so, the merry-go-round continues.

The Systemic Issues No One Talks About

My previous blog explored these issues in more depth, including:

1. Local support failures: There's a wealth of advice on how to set up a business — but little guidance on validating market demand or generating sales. Sector-specific mentorship is rare, and too much focus is placed on vanity metrics over real traction.

2. Unprepared founders: I’ve heard from thousands of aspiring founders over the years. Many don’t understand the basics: how to write a business plan, produce financial projections, or conduct proper market research. Sales? Often not even on the radar.

3. The venture capital disconnect : Too few VCs offer meaningful feedback. Most founders don’t know where to look for investors who back businesses without unicorn potential — and those investors often remain invisible.

4. The “hope sellers” : A growing number of advisers, pitch deck polishers, and pitch competition organisers sell hope — not real support. Many extract value from founders, rather than add to it.

What Needs to Be Said (But Rarely Is)

📌 “Keep your day job — your business idea isn’t viable, and here’s why.” 📌 “Don’t apply for funding if you’re not investment-ready.” 📌 “Get a fundability assessment first, so you know what to improve.”

And what more founders need to ask themselves:

➡️ Is my idea really viable? ➡️ Am I ready for the risks of running a business? ➡️ What will this journey mean for my health, family, and wellbeing? ➡️ Am I chasing investment for the right reasons — or just the dream of wealth?

Why It Matters

The UK’s 5.5 million startups and SMEs are the backbone of the economy and a key driver of growth. Yet, we’ve failed generation after generation of founders. The data proves it:

• 70% of new businesses fail within three years.

• 80% of startups bootstrap — most not by choice, but because they can’t secure grants, investment, or loans.
  

In 2023, just 8,000 businesses received VC funding — a total of £8 billion invested. A lot of emphasis on the amount invested in the media but little on those disappointed. (based on typical rejection rates, I estimate that around 400,000 applicants walked away with nothing and are forgotten).

What Next?

We’re entering a golden era of innovation. Let’s not waste it. We need systemic change: rethinking how we apply and assess applications, lowering the costs of fundraising, and giving every founder a fair shot. We mustn’t let great ideas die just because their creators lacked early business knowledge or access to capital.

Let’s also hope the Government’s forthcoming, Small Business Strategy is bold enough to empower startups and high growth SMEs to thrive — and finally get the support they deserve.