A new report has found that only 2% of UK start-ups successfully progress from Seed to Series A funding, compared to 8% just 18 months ago.

The research, published by ScaleWise, is based on responses from 100 start-up and scale-up leaders and highlights a range of obstacles affecting early-stage companies across the country, focusing on go-to-market (GTM) strategy and talent management.

Delayed growth

The report has revealed that almost a quarter (24%) of founders said that hiring the wrong GTM leader has set their company’s growth back by up to a year. This points to significant challenges in recruitment decisions and onboarding processes at a crucial moment for start-ups aiming to scale operations or secure additional funding.

It was also found that start-ups frequently rely on founders to handle GTM activities directly, with half of Series A-stage chief executives still leading on GTM themselves. This tendency persists even as companies grow, with only 32% of Series A companies having clear GTM ownership beyond the founder or CEO.

Dependence and repeatability

According to the survey, 18% of start-ups are highly dependent on a single large customer, leading to a misleading impression of solid product-market fit. These concentrations of revenue pose risks to sustainability and can disguise underlying weaknesses in repeatable growth.

The research found broader execution challenges as well, including weak internal processes, unclear role definition, and disconnected systems, all of which make execution reactive instead of planned. These factors can prevent start-ups from effectively putting strategy into practice and communicating their progress to potential backers or partners.

Artificial intelligence usage

The adoption of artificial intelligence for driving efficiency and productivity is yet to become standard practice. According to the report, 33% of founders said they are not using AI to improve cost efficiency or enhance their GTM productivity, highlighting a gap in the leverage of new technology for competitive advantage.

Founder perspectives

“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 start-up 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.

Tom Glason, Chief Executive and Co-Founder at ScaleWise, said that many companies are not addressing internal gaps effectively, especially around talent and strategic execution.

“With many start-ups 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 start-ups. 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.”

Impact on the ecosystem

Recent data from Crunchbase, cited in the report, suggests that this decline in the graduation rate from Seed to Series A may hinder the UK’s ability to foster innovation and economic growth, particularly within the technology ecosystem. The findings outline that long recruitment cycles, structural issues, and over-reliance on founders are all contributing to slower progress, reduced resilience, and the risk of start-ups not being able to secure further investment.

The report recommends that start-ups examine their GTM and hiring strategies, consider leveraging fractional expertise where possible, and seek to build clear, repeatable structures for growth that do not depend solely on one founder or key customer relationship.