Millions in Funding. Still a Failure. Why?

I spend a lot of time analysing privately held companies across the world, from the U.S. and U.K. to India, Australia, and all of Southeast Asia.

What’s clear when you look at companies across these diverse regions is how much changes when you shift from one geography to another. Investor mindset, for example, how open they are to long timelines, whether they support the founder’s vision or just want quick returns, and how much patience they have before a company turns profitable.

Compliance and regulation, as we know with India, despite being a fast-moving tech economy, isn’t the most welcoming landscape for deep tech or biotech startups, not necessarily due to lack of talent, but largely because of regulatory roadblocks and funding ecosystem gaps.

Talent quality and opportunity also vary wildly.

But despite these differences, one constant stands out across regions:

Even the most well-funded, high-growth-potential companies — backed by top VCs, PE firms, celebrated founders, and favourable media narratives, can still fail.

Why?

The reasons vary, of course. Local execution, timing, founder dynamics, product-market fit — all valid contributors.

But there’s a deeper question here:Are all the people involved in funding, building, and hyping these companies wrong?Were the analysts, the forecasts, the investor decks, the due diligence, all of it just… wrong?

Not entirely. But in my view, here are some recurring themes behind these failures:

1. Hype ≠ Reality

One of the strongest behavioural forces in finance is hype. And it’s consistently underestimated.

We’ve seen this before:Crypto. AI. The dot-com bubble.

People overestimate short-term gains and ignore long-term challenges.

2. Misaligned Incentives

Investors want returns. Founders want to build. Teams want job security.In high-growth startups, especially post a major funding round, these goals start pulling in opposite directions.

3. Too Much Money, Too Soon

Ironically, overfunding can kill a company faster than underfunding. Bloated hiring, forced expansions, vanity partnerships, rushed product launches. Easy recipe to failure

4. Narrative Over Fundamentals

In pitch decks and boardrooms, the narrative can become more powerful than numbers.

“We’re the Uber for X.”“AI-powered Y.”“Redefining Z.”

When the storytelling outpaces the fundamentals, millions have already been spent on a story that wasn’t real.

Failure isn’t always because the idea was bad or the founders were inexperienced. Often, it’s because everyone involved started believing in the potential a little too much, a little too early — and forgot to check if the ground was solid beneath their feet.

There’s a lot to learn from these failures. Not just about business, but about human behaviour — the psychology of money, risk, belief, and decision-making.

And maybe that’s where the real lessons lie.