Article
Abstract
Despite a substantial body of research on entrepreneurial finance, little is known about how founders themselves experience and interpret the failure to secure capital. This study investigates startup funding failure as a multi-level phenomenon by centering the lived experiences of entrepreneurs based primarily in the United States and Canada. Drawing on semi-structured interviews with ten participants, including early-stage and serial founders, startup consultants, incubator and ecosystem professionals, and investor-side intermediaries, we use reflexive thematic analysis to surface the structural, relational, and psychological mechanisms that interrupt the financing process. Funding failure emerges as neither random nor primarily a function of business quality. It arises from the interaction of institutional and regulatory asymmetries that create unequal access to capital, capability gaps in financial literacy and investor readiness, and misalignments between entrepreneurial ambition, venture maturity, and investor expectations. We engage these findings with pecking order theory, the resource-based view, and capital structure theory, and show that each framework, while illuminating, cannot fully account for the emotional, relational, and institutional dimensions that shape financing outcomes in practice. An integrative conceptual model of startup funding failure is proposed, together with implications for theory, practice, and policy.
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