Why do some early stage businesses seem to easily pass GO while others flounder?

In this dynamic world of early stage and scaling businesses, success is rarely achieved in isolation. First and foremost, because real academic and commercial success is often years off at the time, the story has to be believed in, excite the audience and be credible.

Even for those with great prospects, the most resilient and high-growth ventures are those that foster a collaborative ecosystem – bringing together founders, angel investors, venture capitalists and advisers in a shared journey of innovation, risk-taking and value creation.

The power of multi-layered investment support

Early stage businesses often require capital injections at multiple points in their development. A consortium of investors – ranging from private individuals investing their own money (angels) to institutional venture capitalists and corporate venture funds – all of whom can provide not only financial support but also strategic guidance, sector expertise and access to networks.

For founders, this layered support offers:

• Diverse perspectives on strategy and execution
• Flexible funding options tailored to different growth stages
• Mentorship and operational support from seasoned professionals

For funders, collaboration enables:

• Risk sharing across a syndicate
• Access to promising deals through trusted networks
• Opportunities to add value beyond capital, enhancing returns

Creating the right environment for collaboration

To make multi-layered support possible and easy to arrange, founders and funders must co-create an environment built on trust, transparency and shared purpose. Here are some important elements that we have experienced which provide the most sustainable chances of success:

Clarity and credibility from founders

Founders should know that they need to present their compelling vision backed by solid data and sound execution plans, clean documentation and a willingness to engage openly with investors. A well-prepared data room, clear cap table and defined governance structures signal professionalism and investor readiness. Speaking earlier to funders than when the investment round is about to kick off and establishing a relationship is key to gaining insights and refining ones’ strategies.

They should show shared goals and visions (the key ones being exit strategies and growth expectations) into a shared value creation plan.

Founders should maintain consistent updates and open dialogue with all stakeholders, even if the news is not always positive or as planned. This builds trust and keeps investors engaged, informed and aligned.

Lead investors as catalysts

From the investing side, it is incumbent on the funder to really "get" the objectives and motivations of the founders and then, once committed, to help with big operational features and scaling complexities, bringing more than just money but shared resources (including human resources), industry expertise and crucially, experiences, to help create a nurturing, collaborative relationship with built-in feedback and constructive feedback loops. This creates a control/governance framework that is bespoke to the business and the founders, and which is seen by them not as a constraint but as a means of enabling freedom of management, albeit with one hand on the tiller, and encouraging mutual trust and long- term alignment.

Lead investors should seek to establish a framework which attracts other investors by setting appealing and fair terms, validating the opportunity and facilitating syndication. Lead investors often act as anchors, giving confidence to other business angels, corporates and institutions alike. An appropriate syndication structure will avoid decision-making by committee, which can counter the velocity that is needed for scaling businesses at pace.

Flexible investment instruments

In the knowledge that several rounds of funding are likely to be needed while the business transitions from startup to scale up, this should be facilitated by anticipating this in the financial instruments that are used in the earliest stages. Under current challenging fundraising conditions for early stage businesses, we see the use of convertible notes, advance subscription agreements (ASAs) and Simple Agreements for Future Equity (SAFEs), or milestone-based funding tranches. Allowing different types of investors to participate in early stage funding rounds without overengineering the documentation and avoiding complex and protracted negotiations. These instruments simplify the process and minimise legal costs while accommodating varying risk appetites.

Advisory networks and accelerators

Engaging good and experienced advisers early and participating in incubators or accelerators or working with venture builders can enhance credibility and provide structured support. These organisations often serve as bridges between founders and funders.

What is, in our opinion crucial throughout this "incubator phase", is that the ventures who are supported by such organisations emphasise the importance of commercialisation of the products or services as early and as much as possible, so that startups and spinouts progress quickly beyond the research and development phase to become commercially successful growing and sustainable businesses as early as possible.

Advisers have to rise above their normal template of time-based charges and find creative ways to make their knowledge and documentation available to cash-strapped clients, adopting technology to enable smarter and more efficient ways of delivering client support and using deferred or future value mechanics. Advisers can also genuinely add value by getting past their traditional adversarial models to be “coopertition” with each other, on the truism that when the water rises, all of the boats rise with it.

We would advocate that it's possible to create an environment where a small number of local firms can work effectively together, taking turns to act in the various roles needed (ie, acting interchangeably for funders and founders, using a bank of endorsed template documents and focusing on making the whole investment and due diligence and disclosure processes as transparent, predictable and efficient as possible).

UK-specific support: SEIS and EIS schemes, VCT and patient capital

The UK government offers powerful incentives through the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) for early stage investors in high risk young businesses. These schemes provide generous tax reliefs to investors, making investments in early stage companies more attractive.

These schemes are widely used by angel investors and early stage SEIS and EIS funds, and obtaining Advance Assurance for these schemes or structuring the funding round to ensure your investors can secure these tax reliefs on their investment can significantly improve fundraising success.

For later stage businesses, the continued UK government support of the Venture Capital Trusts (VCTs) industry is vital to ensuring sources of capital are available for Series A fundraises and beyond. VCTs are funds listed on the London Stock Exchange and offer attractive tax incentives to their investors. The 2024/2025 tax year saw a total of £895m raised by VCTs for investment in high-growth high-potential companies in the UK.

At the scale up end of the market, the UK government’s focus on patient capital funds is crucial. These are investors focusing on long-term investment opportunities (anywhere between 3-5 years in some sectors and 10–15 years in others) before seeing any financial returns. They can often write much bigger cheques and are important to help support businesses grow and scale to become global unicorns. However, scale up capital is an area where much more work is needed to enable UK institutions and funds to realistically stand in the provider of choice shoes for UK businesses, rather than, as is currently the case, US and other overseas investors.

The UK’s recent shift toward direct government investment (through the British Patient Capital Fund and the National Wealth Fund) and pension fund engagement in investment in private equities following the Mansion House Compact are promising steps toward closing the "unicorn gap", but progress needs to pick up pace or else we will continue to see our best and brightest Crown Jewel SMEs funded (and then acquired) by overseas investors and buyers.

Real-world examples: UK university spinouts

University spinouts are a shining example of collaborative ecosystems in action and we already have a great base to work from in Oxfordshire.

• Oxford University leads the UK in spinout creation, with over 225 companies launched since 2011. Its tech transfer office, Oxford University Innovation (OUI), plays a key role in connecting ground-breaking research and highly respected academic founders with investors and advisers.
• Oxford Science Enterprises (OSE) has invested in dozens of life sciences and deep tech ventures, helping spinouts raise over £2.6 billion in 2024 alone.
• The UK Spinout Register, launched by HESA, tracks over 2,200 spinouts from 100 institutions, showcasing the national impact of academic entrepreneurship.

These spinouts benefit from founder-friendly equity models, structured support and strong investor networks but there is inevitably room for improvement. With a limited number of "super-investors" and a limited pool of alternative sources of finance this creates an opportunity for a platform for "clubbed" or syndicated ventures and so if we could find a model where there is more collaboration between a larger number of funders, then this could produce a win-win-win for funder, founders and the advisory communities. Could this be an opportunity for SyndicateRoom (or a business with a similar model) to create a platform to harness not just EIS investors but also other early stage EIS investment funds to co-invest alongside a syndicate in these spin-outs, led by a professional lead investor who has set the terms of the round, undertaken due diligence on the business and opportunity and negotiated the legals?

Learning from global ecosystems

The UK can draw valuable lessons from international startup ecosystems:

• Singapore and Canada offer streamlined startup visas and founder-friendly tax regimes.
• Germany and South Korea excel in university to industry collaboration and performance-based R&D funding.
• Silicon Valley remains a benchmark for scale and speed, but UK startups can differentiate through deep tech and inclusive innovation.

The Global Startup Ecosystem Report and APEXE Policy Rankings highlight how policy, infrastructure, and collaboration drive ecosystem success.

A shared journey of growth

When founders, funders, and advisers collaborate effectively, they create a virtuous cycle of growth. Founders gain the capital and wisdom needed to scale; funders benefit from enhanced deal flow and stronger returns; advisers contribute to meaningful ventures.

This ecosystem approach transforms the startup journey from a solitary sprint into a team relay where each participant plays a vital role in crossing the finish line.