Only 2% Of Startups Make It From Seed To Series A, New Research Finds

The number of UK startups graduating from Seed to Series A has gone from 8% to 2% over the past 18 months, according to Crunchbase data shared in a new report by ScaleWise. The paper, Bridging the Gap: The Graduation Crisis in Early-Stage Start-ups, found that weak go-to-market strategies, poor hiring decisions and inflated views of Product-Market Fit are at the heart of the slowdown.

ScaleWise surveyed 100 startup and scale up leaders to understand why many young businesses are struggling to progress through their funding rounds. The findings show that the issue is not ambition but execution. Many founders are struggling to convert their strategy into repeatable, structured action that investors trust.

Tom Glason, CEO and Co-Founder at ScaleWise, commented: “The global tech landscape faces intense competition for both innovation and venture capital funding, and the UK’s economic climate is undeniably challenging too, but start-ups shouldn’t assume external factors alone are stalling their funding journey.

“While over 54% of startup leaders cite market conditions as their biggest hurdle, this overlooks deeper barriers to scale. The path from Seed to Series C has fundamentally shifted and having a robust and repeatable GTM strategy is now imperative for success. Capital may still be king in the long-term, but it is clear that expert GTM guidance has now become a critical enabler of achieving sustainable growth.

“With many startups lacking clear GTM ownership beyond the CEO, it is clear that fractional GTM leaders hold the key to success, presenting a low risk-high reward solution to sourcing the right talent and experience required to overcome the execution hurdles that are impeding startups.

“There’s no need to go through lengthy and drawn out hiring processes to find the right person to help take your business to the next level. It’s now possible to hire the right guidance quickly and efficiently, which results in fast-tracked growth and ensures you hit the targets set for your next funding round.”

How Are Hiring Mistakes Slowing Growth?

1 in 4 UK startups have lost up to a year of growth because of poor hiring choices. ScaleWise’s research shows that 24% of founders admitted that hiring the wrong GTM leader delayed progress by as much as 12 months.

Half of Series A chief executives are still directly running GTM strategy themselves, even though many lack the time and structure to scale it effectively. Two thirds of founders are holding on to GTM responsibilities for too long, which slows company growth. Only 32% of Series A firms have clear GTM ownership beyond the CEO, making it hard for teams to move in the same direction.

ScaleWise found that mis-hires in GTM roles, such as heads of sales, can lead to things like valuation loss, missed milestones and slower fundraising. These hiring errors can burn through runway and force bridge rounds, leaving founders in a weaker position when seeking investment.

Are Startups Misreading Product-Market Fit?

18% of startups are heavily reliant on a single large customer, giving a false impression of market traction. This over-reliance hides gaps in repeatability and can cause founders to believe they have achieved Product-Market Fit when they have not.

ScaleWise found that many businesses mistake early wins or loyal clients for long-term product validation. This misreading of PMF often results in premature scaling and missed sales targets. When these expectations fail, it becomes harder to convince investors of the company’s readiness to expand.

The report shows that early traction is not enough to build investor confidence. Founders who cannot show repeatable results or a clear customer profile often struggle to secure follow-on funding.

What Structural Problems Are Holding Founders Back?

A lack of structure and poor internal processes are some of the biggest barriers to progress. ScaleWise’s research found that only 31% of founders have structured, benchmark-driven plans for their next funding round. Many are reactive in execution rather than proactive, leading to missed targets and slow growth.

Recruitment and onboarding are taking too long and many startups are failing to align sales and marketing functions. Misaligned teams lead to poor lead handling, weak sales pipelines as well as high acquisition costs.

Founders also appear slow to use technology to solve these issues. One third of them are not using AI to cut costs or improve GTM productivity. This underuse of automation is limiting efficiency and keeping operations manual.

What Does The Data Say About Founder Confidence?

Only 38% of founders said they were very confident in their GTM strategy. Another 32% were unsure, which is seen as a warning sign for investors. Confidence improves slightly after Series A, but many UK founders are still cautious.

Economic conditions were listed as a main barrier for 53% of founders, followed by hiring mistakes at 24% and dependency on a single customer at 18%. These factors are influencng what ScaleWise calls a “graduation crisis” in the UK’s startup ecosystem.

The data suggests that founders who can turn vision into measurable execution stand a better chance of securing growth funding. Without proper structure, reliable hires and repeatable sales models, the chances of moving from Seed to Series A will be slim.