The UK is brimming with ambitious founders reshaping tired categories across fmcg.
Brands like Deliciously Ella, Biotiful, and Wild have shown how compelling storytelling, bold branding, and a mission-driven ethos can disrupt the status quo – and attract major acquisitions. But for every headline-grabbing success, there are dozens of startups stuck in a messy funding dead-zone.
The problem isn’t weak products or lack of demand – it’s the perilous journey between early traction and sustainable scale.
Early-stage support
The UK’s SEIS/EIS schemes provide fertile ground for early-stage fmcg brands. Tax incentives attract angel investors and crowdfunding, helping founders raise initial capital with relatively forgiving terms. At this stage, enthusiasm is high, valuation is more art than science, and investors are often interested in exposure to interesting companies rather than painful due diligence processes.
I’m not saying it feels easy out there if you’re a first-time entrepreneur, but if you have a strong proposition and the right approach, you should be able to raise those all-important early funds. Still, what starts out simple enough can quickly get very complicated.
The early-stage ecosystem is both a blessing and a curse. It breeds innovation, but also fierce competition. Look at the oversaturated fields of hard seltzer or functional sodas, home to 20-plus brands that all claim to be “the next big thing”. When faced with crowded categories and mounting pressure, founders often make missteps: wrong investors, wrong deals, and unrealistic valuations.
I know first-hand. Ugly Drinks, my first business, was a perfect example . Here’s where it so often unravels.
The valuation illusion
At seed stage, valuations are vehicles for momentum, not accurate reflections of worth. A £100k revenue brand might raise at a £2m valuation thanks to SEIS/EIS incentives. But fast-forward 18 months, and the founder sees £1m in revenue and assumes a £20m valuation is fair. It’s not.
These early valuations create a psychological trap. Founders believe they’re worth millions on paper, but unless they navigate an exit, that’s all it is: paper. Worse, these inflated figures must keep climbing. Raise at £20m today, and you’ll need to justify £60m tomorrow. Miss the mark or hit market turbulence, and it all crumbles.
The VC trap
Venture capital isn’t inherently bad – some VCs are brilliant and have helped build iconic brands. But most operate with strict timelines and fund economics that don’t align with the often slower growth curve of consumer businesses.
VCs are unicorn hunting. They expect most bets to fail but aim for a handful of huge wins to return the fund. That means pressure. Fast growth. Tight deadlines. And aggressive terms – liquidation preferences, anti-dilution clauses, and other founder-unfriendly conditions that are there to protect their capital, not necessarily to allow for your business to flourish.
VCs aren’t investing their own money. They’re managing someone else’s and must deliver returns within the parameters they have agreed. Their interests are not always aligned to the interests of the portfolio business, which can cause boardroom splits and stifle growth.
Surviving to Series A
If you’ve made it to £5m-plus in revenue and maybe even profitability, you’ve beaten the odds. At this stage, you can shift the power dynamic. You’ve got metrics, a proven product, and options: VC, PE, strategic partnerships, or even debt.
Now, you can raise on your terms. You’ve earned the right to be intentional rather than desperate.
It’s a shame how few UK brands make it to this stage – or they do make it, but sometimes the cap table and the preference stack is so broken that founders find themselves squeezed out of their own businesses.
Rethinking the playbook
Family offices, by contrast to VCs, invest their own capital and can afford patience. They don’t need 10 times returns instantly, and can support sustainable growth with more flexible terms. The catch? Access. Without the right introductions, getting in the room is almost impossible with most of these guys, as they typically fly under the radar.
VC funding is perfect for tech or B2B SaaS. Fast growth, scalable ops, and exponential margins. Consumer brands don’t work that way. They take time. Distribution is complex. Brand equity builds slowly. Retail dynamics are brutal. It has always baffled me how few VCs have direct hands-on operator experience.
What we need is a new playbook. We need patient capital, operator-led funds, and deal structures that don’t hinge on unicorn outcomes. It’s not about giving up ambition. It’s about giving fmcg founders a fair shot at building something lasting.
Until then, too many brilliant brands will fall into the gap between early hype and sustainable scale.
Joe Benn, director at MNC
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