Founder-investor misalignment is killing impact startups. Here’s how to fix it

For years, biotech startups were told that raising capital takes six to nine months. That was never entirely true, but in today’s market, it’s even further from reality. In an increasingly cautious funding environment, founders focused on planetary health face longer due diligence, shifting investor expectations, and an overall slowdown in capital deployment.

The result? Startups are running out of cash before rounds close, while investors – quick to show interest – take longer than ever to commit.

“As an incubator and early-stage investor, we no longer ask founders when they will start fundraising, but rather when they will be out of cash,” says Annick Verween, who heads the Biotope Ventures accelerator and early-stage fund.

Erika Hombert, senior investment manager at PINC, agrees: “We’re seeing too many cases balancing way too close to this line.”

“We're reaching a point in the climate hype cycle where we simply cannot think as idealistically as we could before,” adds Arnoud Klokke, senior associate at BII.

The era of bold bets is over

Three years ago, biotech and climate tech startups could raise millions with little more than a great team, a compelling pitch, and an ambitious vision. That era is over.

When good startups die, we all lose

Structural shifts in the investment landscape have reshaped expectations. In agrifood tech, deal count dropped 24% year over year in 2025, and investors predict “chaos,” “uncertainty,” and “short-term decision making” ahead. In climate tech, much of the capital now comes from first- and second-time funds still under pressure to prove quick returns to LPs.

“Many investors have been burned by companies that scaled prematurely,” says Klokke. “We’re seeing a pullback from big bets on unproven scalability. Facilities built too soon are now sitting idle. The ask has become harder: favorable cost positions, solid margins, and proven product-market fit are now non-negotiables, even for early-stage deals.”

Derisking is the aim of the game

Paradoxically, early-stage investors – whose job is to fund risky ventures – now want to derisk as much as possible. They ask for guarantees many startups simply can’t yet provide: signed offtake agreements, detailed unit economics, and validation once reserved for later stages.

“There’s a clear trend toward needing a higher level of business case validation up front,” says Klokke. “Founders can no longer rely on loose assumptions or hand-wavy claims about product-market fit. Especially in bio, we see companies stumble because they struggle to articulate their value proposition clearly and quantifiably.”

At the same time, many founders overestimate their ability to raise capital, assuming they can replicate past successes. But those companies raised in a very different market—one fueled by abundant capital and investor FOMO. Today’s environment is more deliberate and far less forgiving.

Six hard truths and tips for founders

In this tougher climate, optimism isn’t enough. Founders must be strategic, realistic, and relentlessly prepared – understanding investor dynamics, managing resources wisely, and staying ahead of the process.

1. A term sheet is not a payout

A term sheet only signals the start of due diligence, not a promise to wire funds. Even founders who start early may face long delays.

Verween recalls one example: “This startup began preparing its round over a year ago. They did everything right – secured early interest, built a strong consortium, and even raised bridge financing to keep R&D going. More than twelve months later, that bridge was gone, and the company had €500 left in the bank – with no clarity on when the funds would arrive.”

This wasn’t a failed company, she says: “It’s one of the better ones – solid science, proven data, and business acumen.”

Hombert has seen similar cases. “The time from term sheet to closing is dragging, which puts the entire business plan at risk,” she says. “For us, it’s full speed ahead once we sign a term sheet – but not everyone moves that way.”

2. Never open a round without a lead investor

Investors rely on social proof. Without a lead investor, everyone waits for someone else to validate the deal. Startups that pitch to “followers” first often end up in endless discussions that lead nowhere.

Focus on securing a credible lead early – one strong enough to bring others along. But even then, keep alternatives open.

“In the food sector, there’s been a vacuum of lead investors since the generalists pulled back,” says Hombert. “You can’t close a round with angels, government funding, and microfunds alone. We need more investors willing to take the lead, do the heavy lifting, and actively contribute post-investment.”

3. Data rooms are for founders too

Many startups feel investors barely glance at their data rooms. But they matter.

In reality, most investors begin by scanning to check if the key documents are there. Deeper analysis only happens as discussions progress. This creates a perception gap: founders feel overlooked, while investors are simply pacing their due diligence.

But a strong data room signals professionalism and helps refine the company’s equity story. “Organizing your data room forces clarity,” says Klokke. “It helps founders reflect on positioning, assumptions, and what they really need for the next round.”

Verween advises focusing on substance: “Perfect formatting won’t close your round. Prioritize content that answers investors’ biggest questions.”

4. Fundraising is more than a full-time job

Fundraising consumes far more time than most founders expect. Every investor call, follow-up, and document request adds up – stealing time from product and business growth.

“Fundraising is a time management double bind for CEOs – it’s like sprinting a marathon,” says Hombert. “Start earlier than you think, delegate tasks, and plan for the impact on your personal life. Treat it as a team challenge, not a solo race.”

5. Ask for clarity, expect honesty

Founders should push investors to be transparent about their internal process. “Ask what’s required for an investment decision,” says Hombert. “Will they need to compile an investment memo, run additional due diligence, or hold another IC meeting? If it’s a follow-on investor, will they rely on the lead’s due diligence – and what is that lead willing to share?”

These questions help startups track progress and encourage accountability.

Verween adds that investors must stop leading startups on: “Too often, they engage deeply without a strong intent to invest. Startups hesitate to push back, fearing they’ll seem uncoachable. This power dynamic must shift.”

Hombert agrees: “When investors say a company is ‘too early,’ I tell founders to ask why. They deserve more than vague brush-offs.”

6. Rethink your capital stack

Equity alone won’t cut it in this market. A healthy mix of grants, convertible notes, milestone-based public funding, and early revenues can extend runways and strengthen resilience.

“Structuring this mix strategically makes the difference between stalling and surviving,” says Klokke.

In climate and biotech, where timelines are long and capital needs high, founders should think carefully about who funds what, and when. Not every step requires equity – and not all capital must come from the same source.

The bottom line: mutual reality checks

Misaligned expectations between startups and investors have created a cycle of frustration. Investors want proof upfront; startups expect speed that no longer exists. But the landscape has changed – and pretending otherwise won’t make money arrive faster.

Founders must accept that bold ideas and slick decks don’t close rounds. They need proof points, validated models, and a clear equity story. That means starting earlier, preparing for long diligence, and thinking beyond equity.

Investors, meanwhile, must remember their role: to take early risks and back bold ideas. Prolonged timelines and shifting expectations put viable startups at risk. “Keeping the door open” isn’t neutral – it’s harmful.

Ultimately, everyone’s still learning. Climate and biotech founders are rebuilding conservative industries without a clear playbook. Each subsector – food, materials, mining, biomanufacturing – has unique challenges. The road to commercialisation is still being drawn.

Alignment won’t fix everything, but it can prevent unnecessary failure. Because when good startups die – not from bad science or poor execution, but because timelines outpaced runways – we all lose.