According to Crunchbase data, the rate of UK startups graduating from Seed to Series A has collapsed from 8% to only 2% over the past 18 months. This decline in graduation rate is impacting the UK's ability to foster innovation and economic growth within its tech ecosystem.

The report, Bridging the Gap: The Graduation Crisis in Early-Stage Startups, surveyed 100 startup and scaleup leaders to understand the reasons behind why startups are struggling to graduate from their funding rounds. The findings show that lengthy recruitment and onboarding is significantly halting progress for many startups. Almost one quarter (24%) of founders say hiring the wrong GTM leader delayed growth by up to a year, underscoring the benefits of engaging with fractional GTM leaders before committing to full-time hires.

Other key findings from the report include:

• Startups often over rely on their founder to lead the GTM - half of Series A CEOs are still running GTM themselves
• Two-thirds of startups face bottlenecks from CEOs holding onto GTM responsibilities too long, with only 32% of Series A companies having clear GTM ownership beyond the CEO
• Nearly one in five startups heavily depend on a single large customer, creating a false sense of Product-Market Fit

It is apparent that many startups are failing to turn strategy into action. Weak processes, unclear roles, and disconnected systems make execution reactive rather than proactive. Founders also struggle to communicate traction, address perceived risks, and leverage AI – hindering strategic clarity early in fundraising. Notably, 33% of founders aren’t using AI to improve cost efficiency or boost GTM productivity.

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 startups 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.”

You can learn more in the full report, which can be found here.

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